Staff Writer
Foreign currency shortages have forced Zimbabwe Stock Exchange-listed plastic pipes and fittings manufacturer, Proplastics into making twinning arrangements with local traders for the supply of critical raw materials which are 60 percent more expensive than direct imports.
Presenting the company’s financial results for the half year ended June 30, 2018, Proplastics chief executive Kudakwashe Chigiya said the trading environment remained challenging during the reporting period despite the company posting a positive performance.
Despite the foreign currency pinch and other challenges which affected the manufacturer’s operations in the period under review, Proplastics managed to post a 71 percent growth in revenue recording $10,8 million while sales volumes were also up 29 percent at 2 618 tonnes.
The firm’s profitability for the period was up at $1,2 million from $352 946 in the comparative period last year.
“The foreign currency situation, in particular, deteriorated further compared to prior year. Sources of foreign currency have largely been through toll manufacturing.
“We have also made twinning arrangements with local traders for the supply of the requisite raw materials. However, this comes about 60 percent more expensive than direct imports,” said Chigiya.
He said demand for the firm’s products was strong in the first four months of the year and tapered slightly in the last two months.
The power and water supply situation remained stable throughout the period and the pipe manufacturer hopes this situation will continue, Chigiya said.
“We are optimistic that the current efforts to revitalise the economy will bear fruit in the short-to-medium term. But we think the path to full recovery will still be slow and painful. We are, therefore, bracing up for a largely challenging operating environment in the short term.”
Overheads for the firm during the period were up 39 percent to $1,6 million while EBITDA was at $2, 1 million.
Chigiya said the company’s liquidity position remained strong with current ratio and quick ratio at 3,4 and 1,6 respectively.
Total receivables more than doubled to $3,5 million from the December 2017 position partly due to advance payments towards the mixing plant and PVC resin ($700 000) and the growth in revenues.
Inventories were up 54 percent up to $5,7 million on December 2017 driven by premium pricing on raw materials and deliberate stocking.
Factory volumes for the firm were 32 percent ahead of prior year for the period under review, PVC volumes up 32 percent, HDPE up 101 percent on prior year while IM fittings were up 38 percent compared.
Plant availability was 93 percent compared to 88 percent prior period and this was due to benefits from the investment in new equipment, increased production throughput and time based maintenance.
During the period under review, Proplastics recorded exports growth of 66 percent compared to prior year.
| Consolidated Income Statement | |||
| Details | 30-Jun-18 | 30-Jun-17 | % Change |
| Revenue | 10,762,251 | 6,278,150 | 71.42% |
| Gross Profit | 3,405,921 | 1,607,109 | 111.93% |
| Financing Cost | (39,026) | (6,594) | 491.84% |
| Profit/Loss before Tax | 1,741,970 | 396,218 | 339.65% |
| Profit Attributable to Operations | 1,213,529 | 352,946 | 243.83% |
| Earnings per share © | 0.50 | 0.14 | 257.14% |
| Consolidated Statement of Financial Position | |||
| Details | 30-Jun-18 | 30-Jun-17 | % Change |
| Total Equity | 11,016,951 | 9,428,426 | 16.85% |
| Total Assets | 15,393,669 | 13,052,981 | 17.93% |
| Current Assets | 10,913,401 | 8,590,352 | 27.04% |
| Current Liabilities | 3,170,312 | 2,762,632 | 14.76% |
| Current Ratio | 3.44 | 3.11 | |
| Statement of Cash Flows | |||
| Details | 30-Jun-18 | 30-Jun-17 | % Change |
| Cash Flow from Operating Activities | -1,960,614 | -116,858 | 1577.77% |
| Cash Flow from Investing Activities | -526,409 | -33,693 | 1462.37% |
| Cash Flow from Financing Activities | -307,649 | -484,636 | -36.52% |
| Closing Cash and Cash Equivalents | 1,601,579 | 806,554 | 98.57% |
“We have matched our pricing to international players which has contributed to positive sales growth. The new factory will further allow us to give better pricing and effectively enhance our Export competitiveness,” said Proplastics finance director Paschal Changunda.
He said the company’s main export market, Zambia, was experiencing low economic activity and efforts are underway to improve presence in this territory.
“Enquiries and prospects from this market remain quite encouraging. We are also exploring other countries in the Region, especially the DRC, despite the risks associated with that market,” Changunda said.
