Harare — LISTED concern, Art Holdings Limited suffered a US$2,8 million loss for the full financial year ending September 30 2009, due to low capacity utilisation at its factories.

Art, the manufacturers of tissue paper, stationary, vehicle batteries said the period which combined the Zimbabwe dollar and the United States dollar was characterised by high operating costs which were misaligned with revenue.

The loss included manpower reorganisation costs of US$503 000 and US$1,5 attributed to low level operations at the Mutare factory.

During the period, Art streamlined its operations, reducing its operational divisions from eight to five divisions resulting in the group embarking on a retrenchment exercise.

During the period the Zimbabwe Stock Exchange listed company generated US$25,9 million.

Having gone through turbulent times on the balance sheet and operations, the group resolved that there is a need to recapitalise operation and rationalisation the business in the short term.

Art said capacity utilisation of the group increased from 10 percent in the first quarter of the year to 42 percent by the end of year.

However, low utilisation levels from the papers mills diluted the overall result.

The newsprint machine resumed operations in August operating until year-end as management resolved to stop production in November as the plant was operating at a loss due to continuous breakdowns.

Art said capital expenditure at the paper mills has been deferred until there is certainty regarding the stability of the paper mills operating costs in the current environment.

The groups regional distribution units contributed to the group's loss as they were affected by the global recession and the consequent fall in prices and demand.