daniel chigunwe
Business Writer
Proplastics Limited, a leading plastic pipe manufacturer, says subdued demand for its products resulted in declining revenue and sales volumes during the interim period to June 30, 2024.
The company, listed on the Zimbabwe Stock Exchange (ZSE) produces polyvinyl chloride (PVC), High-Density Polyethylene (HDPE), Low-density Polyethylene (LDPE) pipes and related fittings.
Commenting on the half year financials, company chairman, Gregory Sebborn, said turnover dropped by 18 percent to US$8,6 million from US$10,4 million in the prior period.
“The decline was due to subdued demand for the group’s products, which saw sales volumes declining by 8 percent compared to the prior period,” he said.
He noted that exports sales contributed only one percent to total sales due to risk and competitive issues given the 25 percent foreign currency surrender policy coupled with the unavailability of foreign currency on the formal market.
“Cost of sales declined by 15 percent, in line with the decline in sales volumes while gross profit declined by 24 percent to US$2,5 million, compared to US$3,3 million in the prior period,” said Sebborn.
The company’s profit before tax of US$418 thousand was 58 percent below the prior period amount of US$1 million, while EBITDA was at US$1 million, down from US$1.6 million in the prior period.
“Resultantly, the business was in a loss position of US$72 000 after accounting for normal and deferred tax,” said Sebborn.
He noted that the company’s statement of financial position also weakened, with total assets at US$22,7 million compared to US$24,6 million in the prior period.
Mr Sebborn said the current ratio closed the period at 1,59 from 1,28 in the prior period and the gearing ratio increased to 5 percent, still providing some leverage if required to bolster working capital requirements.
The group closed the half year with cash and cash equivalents of US$268 thousand. Mr Sebborn said any outstanding amounts from the auction system were accounted for under receivables, not cash and cash equivalents.
The company expects the operating environment to remain challenging due to liquidity constraints and the continuing effects of the devastating drought in the region.
As a result, the business has put in place initiatives to recover in the second half of the year.
“With the installation and commissioning of the solar plant now complete, the business is expected to generate about 50,000 kilowatt hours (kWh) of energy per month, thus reducing electricity bills and generator fuel consumption.
“This will result in significant savings, which will be reflected in the second half of the year,” said Sebborn.
He said raw material pricing is expected to remain stable during the second half of the year, and the company will continue to monitor the environment for possible supply options.
Bongani Ndlovu