ART Holdings recorded a 4% decline in first-quarter turnover to US$7 million for the period ended 31 December 2025, as tight liquidity conditions and high borrowing costs continued to weigh on production and volumes, despite a relatively stable macroeconomic environment.

In a trading update, the diversified manufacturing group said consistent monetary policy measures had created a degree of stability, but constrained working capital limited the company’s ability to fully capitalise on improved power availability and firmer demand in some product lines.

“The first quarter of the 2026 financial year was characterised by continued stability and consistent monetary policy measures, enabling strategic responses sufficient time to impact performance,” the company said, noting that liquidity constraints and elevated borrowing costs remained a key challenge.

Group sales volumes were 1% below the prior year, reflecting production disruptions and logistical delays linked to working capital gaps. While demand for Exide batteries and Eversharp pens strengthened, the cumulative impact of funding limitations constrained output.

Export volumes declined by 2% year-on-year as the group tightened credit terms across the region to protect cash flows.

ART’s energy division delivered a marginal improvement in local battery volumes, supported by changes in sales channels and targeted marketing initiatives. Management said margin gains were driven by improved product mix and tighter cost controls.

“Gross margin improvement was underpinned by favourable product mix and cost containment initiatives,” the group said, adding that the Exide brand remained strong as efforts continued to address recurring product shortages.

The stationery and paper segment remained under pressure, with pen volumes falling 14% compared to the prior year. Turnover declined by 12%, although the group pointed to improved pricing discipline and better stocking by traditional channel partners.

Significant back-to-school orders were supplied in January 2026, providing some relief toward the end of the period.

Tissue converting operations were deferred further, with the group opting to preserve working capital and revisit the project in the second half of the financial year once raw material planning stabilises.

At Mutare Estates, timber volumes surged 40% year-on-year after the business widened its customer base. However, the gains were partially offset by margin compression driven by higher harvesting and milling costs.

ART said it continued to implement strategic interventions outlined in its 2025 full-year results, including creditor engagement, settlement of restructuring obligations, strict cost control and tighter working capital management.

Progress has also been made on planned property disposals, with proceeds expected in the second quarter at market-reflective prices.

Chief Executive Officer M Macheka said the group remains focused on rebuilding liquidity and operational resilience.

“Our recovery strategy will continue to prioritise margins, liquidity and operational resilience,” Macheka said. “We recognise stakeholder concern on the pace of recovery given the difficulties the business has faced, and we are confident that ongoing initiatives, given sufficient time, will deliver consistently improved financial performance.”

He said the business requires recapitalisation, but is currently prioritising internal funding through improved cash generation, disciplined working capital management and asset disposals.

“Future capital decisions will be guided by shareholder value considerations and prevailing economic conditions,” Macheka said.