• Mon. Apr 15th, 2024

Eversharp retools operations after reporting 7% decline in volume

ByEconomic Times

Jun 29, 2023

By ETimes

Eversharp, the country’s staple, reported a 7% decline in volume for the half year ended 31 March 2023 owing to power crises and supply chain destructions.

Amalgamated Regional Trading (ART), which owns the division, bemoans uncertainty in the environment, which continues to have an effect on business cycles.

“The division has retooled and should avert product supply challenges in the second half. Eversharp has benefited from the strong performance in the informal sector and the availability of stationery trading lines,” Art chairman Thomas Wushe said in a statement accompanying the results.

Eversharp has been making pens since 1972.

Previously, the ballpoint pen manufacturer has been on a drive to grow the export and non-scholastic markets.

Besides Eversharp, ART also owns brands that include Chloride Zimbabwe, Chloride Zambia, Exide Express, Softex Tissue Products and Kadoma Paper Mills among others.

In the period, overall volumes for the group declined by 9%.

“The frequent price movements in response to inflation and the depreciation of the local currency affected trading and demand. Export volumes fell by 30% due to product shortages and the prioritisation of the local market.”

Inflation adjusted revenue for the group rose 42% to $15 billion compared to the prior year.

Group margins at 43% remained strong despite pressure from rising operating costs.

He said profitability was dampened by once-off reorganisation and plant optimisation costs in the paper business.

“The delay in the completion of the Paper projects necessitated the restructuring of borrowings further increasing the Group’s exposure to adverse exchange rate movements. An exchange loss of $1.97 billion was recorded during the period,” he said.

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He indicated that US dollar revenue increased over the period.

“Overall hard currency sales increased and improved the ability of the business to meet its foreign currency commitments. This, however, had a significant distortive impact on the group’s profitability as foreign currency sales are recognised at the official auction exchange rate.

“The Board estimates that for the half year the group’s revenues at US$22.2 million declined by 8% compared to prior year whilst operating profit decreased to US$1.3 million,” he added.

It did not declare a dividend.

ART closed its last trading day at $55.00 per share on the Zimbabwe Stock Exchange (ZSE). It began the year with a share price of $14.00 and has since gained 293% on that price valuation, ranking it 32nd on the ZSE in terms of year-to-date performance – HARARE

Also read: https://etimes.co.zw/analysis-weak-revenue-growth-as-fair-value-gains-drive-art-holdings-to-profitability/

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