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Enacy Mapakame Business Reporter
PLASTIC pipes and fittings manufacturer, Proplastics Limited had a strong performance in the first four months of the year to April 2018 with revenue coming out 86 percent ahead of same period last year on the back of strong demand and outstanding orders from 2017.
Profitability for the four months is already 2,5 times higher than the full six months in 2017.
Chief executive officer Kuda Chigiya told shareholders the company’s annual general meeting that sales volumes for the period under review was 49 percent above prior year comparative.
By close of the four months under review, gross profit had surged 150 percent above prior year levels.
However, like the rest of the industry in Zimbabwe, Proplastics battled foreign currency shortages as the country’s nostro balances remain subdued.
“The Group started the year 2018 on a positive note. The biggest challenge was the availability of foreign currency as allocations dried up in the first 4 months, starting mid-January.
“We, therefore, experienced product supply gaps caused by challenges in securing foreign currency for the importation of raw materials,” said Mr Chigiya.
But raw material supplies remain stable with the factory running uninterrupted. Mr Chigiya said the company had approximately one and an half months cover on raw materials.
Demand for products in the month of April slowed down but management remains upbeat the group will report above average performance on both top line and bottom line at half year.
Meanwhile, construction of its 5 200 square metre factory, which began last November remains on course with current progress now at 40 percent against a target of 45 percent.
This was caused by unforeseen high ground water table.
“We expect to be back on schedule within the next few weeks,” said Mr Chigiya adding foreign currency shortages also affected the group’s ability to secure the required imported components of the project.
Construction of the factory is expected to be complete by end of October while migration from the old factory is targeted for end of the year and should be completed in the first quarter of 2019.
The new factory will help streamline work at the company, while complementing other downstream operations.
On completion, it will also compliment the firm’s quest to increase exports into the region.
In the outlook, Proplastics expects demand to remain strong driven by agriculture, local authorities, mining and housing development.
Online Reporter