Tinashe Makichi
Proplastics started the year 2018 on a positive note recording an 86 percent growth in revenue for the first four months, buoyed by a growing order book from different infrastructure and agriculture projects currently being undertaken in the country.
The growth was also on the back of outstanding orders from 2017, coupled by strong consumer demand in the first quarter.
Gross profit for the four months is 150 percent above prior year levels.
The sales performance for the company in the four months under review were good with volumes rising 49 percent from similar period last year.
“The sales performance was matched by a solid plant performance and this resulted in healthy gross profit margins. The biggest challenge was the availability of foreign currency as allocations dried up in the first four months, starting mid January,” said Proplastics managing director Kudakwashe Chigiya in his trading update.
He said the company therefore experienced product supply gaps caused by challenges in securing foreign currency for the importation of raw materials.
“However, raw material supplies are stable currently and the factory is running uninterrupted. We currently have approximately one and half months cover on raw material stocks,” said Chigiya.
He said the supply of electricity and water was also stable during the period.
Chigiya said although demand slowed down in the month of April, the group is on course to reporting an above average performance on revenues and profitability at half year.
He said profitability for the period under review is already 2,5 times higher than the full six months of 2017.
The company’s new 5200m² factory construction project which began in November last year is on 40 percent in terms of progress against a target of 45 percent.
This was caused by unforeseen high ground water table and the company expects to be back on schedule within the next few weeks.
The major challenge on the project as was expected, has been the ability to secure the requisite foreign currency for the imported components of the project.
“We have already identified a supplier for a state-of-the-art automated mixing plant from Italy. Through our bankers we are currently processing the required deposits. We expect to have completed the factory construction by the end of October,” said Chigiya.
He said migration from the old factory is targeted for end of the year and should be completed in the first quarter of 2019.
Going forward, Proplastics is expecting demand to be driven by agriculture, local authorities, mining and housing development.
