By ETimes
HARARE – Proplastics says it has successfully secured sufficient raw materials to ensure stock availability in the market, underpinned by the free finances created.
In October last year, the government stated that it would maintain its multi-currency system, anchored by the US dollar, until 2030.
The multi-currency regime was supposed to end in 2025. However, due to the uncertainty this has caused, several institutions were unwilling to grant loans after 2025.
Regardless of the operating environment, the piping products manufacturer posted defensive financial results.
“The business benefited from the foreign auction system in the first half of the year. However, this slowed down in the third quarter owing to inaccessibility of ZWL inflows combined with the increase of the internally generated USD sales,” group chairperson Gregory Sebborn said in a trading update for the 9 months to September 2023.
“The market continued with the desire to settle transactions in USD as opposed to the use of local currency. Currently, the business is transacting at 90% in USD and 10% in ZWL.”
“Raw material supply was stable throughout the period and at end of September.
Sebborn said the business held “significant stocks” of PVC resin to ensure uninterrupted supply to the market.
“The pricing of resin continued to be more stable compared to the same period last year and post the Covid-19 pandemic and later the Russia-Ukraine conflict.”
In the period, sales volumes rose 24% to 4,987 tonnes.
Proplastics topline surged by 5% to US$16.1million.
“Though volumes increased, there was a general slowdown between the month of July and September, which is traditionally our peak period,” he said.
Exports saw a notable increase, accounting for 13% of overall sales.
“Active markets were Malawi contributing 70%, Congo at 15% and Zambia 15%.”
The current ratio stood at 1: 1.37 from the December 2022 position of 1:1.11.
The status of external creditors has also improved, with a 25% decline in total creditors since the end of December 2022.
“The business remains profitable, although operating at subdued levels,” he said.
In his outlook, he said, “We anticipate modest demand for products across all market segments on the domestic market.”
The current share price of Proplastics is $1,700.00. The counter began the year with a share price of $608.00 and has since gained 180% on that price valuation, ranking it 13th on the ZSE in terms of year-to-date performance.