Proplastics, the pipe and fittings manufacturer said it seeks to improve its sales as it banks on increased demand due to increase in construction work.
Sales volumes were down 7 percent on prior year given depressed domestic demand as economic challenges persisted and exports contributed 6 percent to total sales, which was below the internally set target of 10 percent.
“It is important to note that a significant portion of the group’s revenue was recorded at the interbank rate, having been received in United States dollars. With the gap between the official and alternative market still significant, this had an impact on the recorded revenues,” Mr. Gregg Sebborn chairman of Proplastics said in the 2022 annual report.
During the year turnover grew by 23 percent to $11,7 billion from $9,5 billion in prior year as this was on the back of price adjustments considering economic fundamentals, both locally and globally.
According to the chairman, the cost of sales managed to increase by only 7 percent in the prior year, on the back of operational efficiencies in the new factory and more direct and smart procurement of raw materials.
This saw gross profit margins improved significantly to 42 percent from 34 percent in the prior year and resultantly, the Group posted a gross profit of $4,9 billion up from $3,2 billion in the prior year in 2021.
However, inevitably, given the movement in exchange rates and the fact that the Group imports about 90 percent of its raw materials, thus holding significant amounts of foreign liabilities at any given point, the Group recorded net exchange losses amounting to $896 million.
This is compared to prior year net exchange loss of $146 million.
Proplastics recorded earnings before interest and tax of $1,5 billion compared to $2,2 billion in 2021.
As a result, the Group then recorded a profit before tax of $600 million and a profit after tax of $110 million for the year 2022.
Proplastics noted that the interest rates charged by banks were exorbitant and it was no longer exposed to local currency debt.
“As Zimbabwean dollar interest borrowing rates remain high, the group has extinguished all its Zimbabwean dollar debts and opened United States Dollar credit lines with the banks. In the same vein, participation on the Auction platform will be reduced as the Group utilizes its internally generated foreign currency,” Sebborn added.
According to Sebborn, the new 500mm PVC line is producing the desired outputs and is effectively fulfilling the demand for big bore pipes and demand for these bigger bore pipes seem to be growing and this augurs well for this investment.
“The statement of financial position remained strong with total assets amounting to $18 billion. The current ratio closed the year at 1,11. The gearing ratio remained low at 3 percent giving the Group leverage to borrow further for the funding of raw materials,” said Mr. Sebborn.
Proplastics closed the year with cash and cash equivalents of $516 million – Harare