- Debts decreased by 66.7% to US$1 million
- High raw-materials costs likely to spill over into final quarter
- The company is in a solid financial position
Listed plastics pipe and containers manufacturer, Proplastics endorsed the efforts being done by the foreign exchange auction market to end the backlog which had been stretching to more than two months.
Resultantly, the company’s arrears to foreign creditors were reduced by approximately 66.7% to US$1 million from US$3 million. This leaves the debt at ZWL93 million using the current US$1: ZWL93 rate.
In a trading update for the quarter ended 30 September 2021, the Group’s chairperson, Gregory Sebborn said, “The backlog in the disbursement of foreign currency which was stretching beyond two months was significantly reduced during the quarter under review.
We commend the authorities on their efforts to reduce the backlog which is proving to be a challenge for many businesses.”
As debts for Proplastics dwindled, export volumes for the third quarter ended 30 September 2021 increased by 178% and volumes grew by 36%.
This raises a question of interest as various companies including Simbisa, POTRAZ, National Tyre Services and Dairibord gave a look-warm assessment of the foreign auction market as it struggled to disburse funds on time.
Meanwhile, in the third quarter update, the Group forecasted the possible drawback effect on its business performance for the final quarter due to shortages of raw materials accompanied by price increases.
The Group said it incurred high costs of inadequate raw materials and shipping costs of up to 480% during the quarter, which are also likely to spill over to its final quarter.
However, Proplastics is in a solid financial position as its assets amounts to ZWL2.1 billion against ZWL715 million in liabilities as shown by its half-year financials for the year ended 30 June 2021. This means the Group can meet its debts and other obligations in time without being liquidated.
Proplastics Limited manufactures and markets plastic pipes and fittings, specialising in the production of polyvinyl chloride (PVC), high-density polyethylene (HDPE), low-density polyethylene (LDPE) pipes and related fittings. The pipes and fittings are manufactured for various applications in irrigation, water and sewer reticulation, mining, telecommunications and building construction.
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