Art Corporation AGM

ART Corporation says it is looking at increasing profitability through improved efficiencies from capex in new machinery and automation after a 15% turnover growth in continuing operations in the 4 months to January 31, CEO Richard Zirobwa told the AGM today (FRIDAY)

He said Art Corporation expected to invest $450 000 in Chloride to take capacity utilisation up to 100% and would be importing maintenance-free battery equipment from partners in SA and solar inverting machinery from India.

“ The group would also look at investing US$450 000 in Softex and $250 000 in Eversharp to take both units to the next level of automation. $500 000 would be invested in 2013 in KPM to improve the product quality,” he said.

Zirobwa said the company expect a topline of US$37 million for the full year ending December 2012.

Batteries volumes were up 36% on last year at 50 947 units, while capacity utilisation moved up to 58% from 42%. Softex reported a 28% increase in volumes to 767t from 598t as capacity utilisation moved up to 48% from 37%.

“All operations are currently profitable while Eversharp is at breakeven due to issues over machinery. We project a positive projection in the half year.”

Capacity utilisation and volumes improved in the Batteries and Converted Tissue operations, but was lower at Kadoma Paper Mills and in Eversharp.

“On the downside, the debt has gone up marginally to US$9,6 million, of which US$1,2 million is long term. 84% of operating profit was channeled towards interest payments, but we were still in the black”

He said the group was working on debt reduction on 2 fronts: Firstly, to reduce the rate to 19% from 23% by year end in September, and secondly, to liquidate at least half of the debt.

“However, the pressure to dispose is not as much as last year. We want to dispose at the right price, but we can now reduce interest burden first, then liquidate US$4 million by selling assets at the right price.”

Volumes were 5% lower at KPM at 1 417t from 1 537t and capacity utilisation eased to 83% from 87% as the group struggled with teething problems post a maintenance shutdown in October.

Pen volumes in Eversharp dropped to 12 million units from 13 million due to a failure of the moulding machinery. New equipment had been ordered and would arrive in May.

Overall operating margins had risen to 33% from 28% due to the improvements in Batteries and Softex. Cashflows were also positive.

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