Listed consumer discretionary producer Proplastics signaled that both its production and sales volumes were up 10 percent in the quarter ending March 31, 2023.
In a statement chairman Greg Sebborn said, “Sales volumes for the quarter grew by 10% compared to the same period last year. Production volumes grew by 10% compared to the previous period despite production interruptions related to power cuts which also affected the sales product mix.
The company said revenue remained flat compared to the previous year as they reduced their selling prices due to the reduction in global prices of major raw materials.
Of the revenue mix, exports contributed 15 percent to the total sales revenue, representing a 91 percent growth compared to the same period last year.
Like most businesses in the country, Proplastics saw its revenue inflow being mainly skewed towards United States Dollars.
“The raw material supply was consistent throughout the quarter, after removal of COVID19 restrictions and the Ukrainian conflict not having a huge negative impact on supply,” said Sebborn.
Proplastics says it will continue to implement a number of initiatives aimed at improving top-line and bottom-line performance despite the trading environment’s complexity
Gross profit margins for the reporting period improved compared to prior year on efficiencies realized from the plant modernization initiatives.
“With the enhanced factory capacity, the business will be able to convert all anticipated orders.”
A total of US$2,7 million was spent on capital equipment in the last trading year and will start to be felt in the operations this year.
The newly commissioned PVC line already contributed 12 percent to the total production volumes last year while the new injection molding machines and molds resulted in a 10 percent increase in total volumes.
It expects half year performance to show an improvement from the reported first quarter performance.
“With all the complexities in the trading environment, the business remains alive to the challenges and continues to implement various initiatives focused on improving revenue and profitability,” it said.
The market continued to show inclination to settle transactions in United States Dollars as opposed to the use of the local currency.
Chairman Sebborn added that, “The business continues to participate on the foreign currency auction floor with allocations amounting to US$600 000 having been received for the quarter with USD400 000 already disbursed.”
Proplastics applauded certain fiscal and monetary changes as they had a bearing on the business, among them the reduction in interest rates to 150 percent from 200 percent, reduction in local USD transactional tax to 2 percent from 4 percent as well as the upward review of USD retention to 85 percent of locally earned dollars and 75 percent for export earnings.
In its outlook, Proplastics said demand is expected to improve driven by public and private sector initiated projects and transactions are likely to continue being skewed towards United States Dollars.
Mr. Sebborn alluded that despite the drawback of the power challenges, the factory remains capacitated to convert all orders in time as a result of modern investments into the new factory – Harare