Chronicle Editor
Oliver Kazunga, Senior Business Reporter
PLASTIC pipes and fitting manufacturer, Proplastics, closed the first half of the year with a strong financial position, buoyed by a rise in quarterly demand, which neutralised the impact of the Covid-19 pandemic.
The company is now putting in place measures to secure critical raw materials to beef up output and meet market requirements. It said production was now in full swing in the new PVC 9 unit in Harare, which is geared to ramp up capacity utilisation to 70 percent from 50 percent.
The company’s investment outlay on the new factory is now complete and the working capital position has started to improve, chairman, Mr Gregory Sebborn said.
He, however, said the global impact of the Covid-19 has significantly affected the group’s domestic and regional markets, resulting in interruptions in the entire supply and value chains.
“The statement of financial position remained solid with total assets amounting to ZWL$764,4 million. Borrowings remained at minimal levels with a debt to equity ratio of one percent,” he said in a statement accompanying financial results for the period ended 30 June 2020.
“This is particularly pleasing as the expenditure on the construction of the new factory is up to date and waiting for the final account.”
Proplastics expects the sound financial position to further improve during the remainder of the year having closed the period under review with cash and cash equivalents of $20,2 million.
“The structural installation of the hardware for the new mixing plant is also complete. Unfortunately, the mixing plant software could not be commissioned during the period under review as the Italian engineers working on the project were recalled at the onset of the pandemic,” said the company.
Despite the inflationary environment experienced during the period under review, the cost of sales was adequately contained resulting in gross profit margins jumping to 52 percent from 39 percent compared to similar period last year.
This was a result of the operational efficiencies realised from the new modern factory, it said.
“We expect continued improvement as we get back to full production and when the new mixing plant eventually gets commissioned in the second-half of the year.
“Due to the inflationary pressures, the lockdown effect and relocation related costs, overheads were up by 23 percent from prior year levels, which resulted in profit before tax of ZWL$26,6 million.”
After the deduction of taxation, both current and deferred, the group recorded a loss for the period of ZWL$107,3 million.
“The result was primarily a result of a fixed exchange rate applied to foreign currency receipts prior to the introduction of the currency auction system towards the end of June.
“While a financial loss was recorded for the period, cash flows remained robust,” said the company. — @okazunga.
Online Reporter