By Alois Vinga
DIVERSIFIED industrial group, Art Corporation, has tabled plans to recapitalise the paper business following the recent takeover of Nampak’s 50% stake in Softex.
In May this year, ART Corporation acquired 50% of Softex shares worth US$800 000 from Nampak in a transaction which enabled the latter to become the major shareholder in the unit.
The decision to acquire the shares is in line with ART’s five-year turnaround strategy which saw the group enter its second growth phase underpinned by a consolidation of immediate past gains and the capitalisation of the paper business in particular.
The total consideration of US$800 000 payment in respect of the 1.4 million shares was paid in Softex in six equal monthly instalments with effect from the 30th of May 2021.
Presenting a trading update for the third quarter ended June 30 2021, ART’s group chief executive officer, Milton Macheka said the recent completion of the transaction has enabled the setting of new priorities.
“The Group is now focused on streamlining and capitalizing the paper business silo. The Group has prioritised the retooling of the paper chain with the prevailing global and regional overcapacity in the industry creating a window of opportunity to replace antiquated equipment,” he said.
Meanwhile, during the period under review, the group’s overall volumes increased by 52% compared to the same period last year as volumes across the divisions recovered in line with the improved economic activity.
Export earnings were marginally ahead of the prior year with paper export volumes into the region showing signs of recovery.
Year to date sales volumes were 15% ahead of prior year. Year to date revenue grew by 384% in historical terms and by 39% in inflation adjusted terms compared to the same period last year.
The batteries business segment continued to realize the benefits of its capitalization program as improved product availability across most product lines resulted in a 37% volume growth during the quarter.
The paper segment, Kadoma Paper Mills, National Waste Collections and Softex registered a moderate volume increase of 11% compared to the prior year.
Added Macheka, “The business still believes in the underlying strength of its core paper business segments and the capital expenditure commitments taken will ensure recovery when fully implemented.”