• Tue. Apr 23rd, 2024

Proplastics switch functional currency to USD

ByEconomic Times

Jun 22, 2023

…sales volumes up 14% in first 5 months

By ETimes

Piping products manufacturer Proplastics sales volumes for the first 5 months of 2023 rose 14% compared to the same period last year despite the challenging operating environment.

While the economic climate has been unsteady since the start of the year, chief executive Kuda Chigiya told the company’s annual general meeting that it has been more so in the past two months.

“The economic volatilities are creating uncertainties in the trading environment. Naturally, this affected demand for the Company’s products as most projects slowed down,” he said.

When compared to the same period last year, sales revenue increased by 4%.

The company’s revenues remain heavily skewed towards the US dollar at a ratio of 70:30 to ZWL.

Export sales appreciated by 77% compared to the prior year.

“Overall contribution to total sales was at 15% against 9% for the same period last year. The target for exports remains at 10-15% of total Sales.”

The major cause of the production volumes’ 17.5% decrease from the previous year, Chigiya said, was a lack of electricity.

“We lost an average of 28 days of production due power cuts and faults,” he said.

On a monthly basis, the company requires US$2 million for raw materials.

He said the company was not getting less foreign currency than it needed on the auction system.

“The business sometimes participated on the foreign currency auction with allocations amounting to $1,1 million to date, and US$820 000 already disbursed. The allocations are far from meeting the business’s requirements,” he said.

“Management has remained cognizant of the forex challenges and implemented strategies to increase internal foreign currency sales to service foreign suppliers.”

The business has, however, more than two months’ worth of essential raw materials on hand.

The availability of new factories was 92%, while their utilization was 56%.

The currency volatility in the market continues to pose challenges for auditors, as the ZWL results do not reflect meaningful reporting.

“Functional currency was changed to USD on 1 January 2023 but reporting currency remains ZWL,” he said.

In his outlook, he said performance for the first half of the year should be somewhat better than last year – Harare

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