• Proplastics generated US$3.28 million in cash from operating activities in 2025, a 256% improvement from 2024
• The company plans to invest US$2.406 million in capital expenditure in 2026, nearly three times the 2025 figure, which will be financed from internal resources and existing facilities
• Proplastics faces challenges from the 30% foreign currency surrender requirement, and the new ZiG payment policy, which may impact USD cash generation from government sales

Harare- Proplastics Limited, the Zimbabwe Stock Exchange-listed manufacturer of plastic piping systems that underpin water infrastructure, sanitation, irrigation, and construction across Zimbabwe, has reported revenue of US$22.78 million for the year ended 31 December 2025, an 11% increase from US$20.60 million in 2024.

This comes after the company navigated power disruptions that required solar backup investment to manage, tight ZiG liquidity throughout the year, and a second-half slowdown in government-funded projects caused by fiscal tightening.

Gross profit rose 23% to US$7.49 million, expanding the gross margin from 29.6% in 2024 to 32.9% in 2025, a meaningful improvement that reflects pricing discipline and cost containment in administrative and distribution functions.

Profit before tax grew 21% to US$1.99 million and profit after tax reached US$1.39 million, with te board declaring a final dividend of US$0.20 cents per share, a 67% increase on the prior year's US$0.12 cents, payable on or about 29 May 2026 to shareholders registered at close of business on 22 May 2026.

The most immediately striking feature of the FY2025 financial statements is the relationship between cash generated and cash held. Proplastics produced US$3.28 million in cash from operating activities, a 256% improvement on the US$920,000 generated in 2024 and the strongest operating cash performance the group has recorded in recent financial history. After interest payments of US$231,000 and income tax of US$399,000, net operating cash inflow was US$2.65 million.

The year-end cash and cash equivalents balance is US$366,000, that is US$2.28 million of operating surplus that does not appear in the cash balance, and its destination is the most analytically important story in these results. Capital expenditure absorbed US$793,000, consistent with the US$809,000 formal capex figure.

Financing activities consumed US$1.86 million, the material majority of which is debt repayment, the group reduced total borrowings from US$2.12 million to US$830,000, a reduction of US$1.29 million or 61% in a single financial year. The remainder of the financing outflow was dividends of US$314,000.

Proplastics used its strongest cash flow year in recent memory not to build a cash reserve, not to accelerate capital investment, but to surgically eliminate most of its debt. The current ratio strengthened to 2.07 times, total liabilities fell from US$9.75 million to US$8.41 million, hence, the balance sheet that enters 2026 is materially cleaner than the one that began 2025.

“The recent pronouncement by the Ministry of Finance and Economic Development, where payments for all supplies to government departments and quasi-government entities will now be in ZWG, poses a unique challenge within our value chain and will possibly exert pressure on currency stability,” Chairperson, Gregory Sebborn said in a statement accompanying the full year financials.

Proplastics manufactures infrastructure piping, polyvinyl chloride pipes, fittings, and related products used in government water reticulation schemes, municipal sanitation networks, irrigation infrastructure, and public construction projects. Government and quasi-government entities are not a peripheral segment of the company's customer base. They are the structural demand anchor for the product category Proplastics exists to serve.

The company's raw materials, PVC compounds, stabilisers, colourants, and processing chemicals,  are internationally sourced and USD-priced. The company thinks in dollars, prices in dollars, and buys inputs in dollars. The Ministry of Finance has now told it that a material segment of its customers will pay in ZiG.

The arithmetic of this policy on Proplastics' effective USD revenue is not complicated. Zimbabwe's ZiG trades at an official interbank rate that carries an approximately 30% premium against the parallel market rate at which ZiG can be reliably converted to USD for raw material procurement purposes.

A government entity that pays Proplastics US$100 worth of pipes in ZiG at the official rate hands Proplastics a ZiG balance that converts to approximately US$77 at the rate the company will actually experience when procuring the next PVC resin shipment from its international suppliers. The 23% gap between face value and purchasing power does not appear in revenue, it does not appear in cost of sales, but it appears in the working capital cycle, slowly and invisibly, as the USD purchasing power of ZiG receivables is consumed in conversion losses between the invoice date and the raw material procurement date.

The 2025 income statement does not carry this cost, but the 2026 income statement will.

The ZiG government payment policy does not operate in isolation, but alongside a second government policy that the chairman has also flagged in the same results, the 30% foreign currency surrender requirement, which mandates that Proplastics hand over 30 cents of every USD earned from export sales at the official interbank rate.

This surrender requirement is the direct cause of the company's export sales representing only 2.7% of total turnover despite the clear strategic logic of regional market diversification for a manufacturer with spare capacity and competitive product quality. Exporting costs Proplastics 30 cents of every dollar at the margin, before logistics and distribution, which makes its piping materially more expensive than South African or regional competitors who face no equivalent policy-imposed cost.

The chairperson's statement explicitly names this, “export sales were constrained by competitive pressures and the 30% foreign currency surrender policy.”

What has not been named, and what the results therefore require an analyst to construct, is the combined effect of both policies simultaneously.

On the export side, the 30% surrender requirement costs the company 30 cents of every dollar earned, making export growth structurally uneconomic at current volumes. On the domestic government sales side, the new ZiG payment policy introduces an effective parallel market discount of approximately 23 cents on every dollar invoiced to a government client.

Proplastics' two largest demand channels, domestic government infrastructure and regional export, are therefore simultaneously subject to structural USD leakage imposed by two separate government policy instruments. The company is not mismanaged and not unprofitable, but it is operating competently within a policy environment that is extracting a growing implicit tax from both sides of its revenue base at the same time. This is the story that does not appear in the headline profit numbers.

Proplastics invested US$809,000 in capital expenditure in 2025, and the budgeted capital expenditure for the year ending 31 December 2026 is US$2.406 million, nearly three times the 2025 figure. This expenditure will be financed from internal resources and existing facilities.

Internal resources means operating cash flow, and existing facilities means borrowings secured against the company's assets. The company enters 2026 with borrowings of only US$830,000 against freehold land and buildings of US$7.014 million. There is significant headroom to borrow against the land collateral.

If government clients make up a material proportion of Proplastics' domestic revenue, which the product category strongly implies, and those clients now pay in ZiG, the effective USD cash generation from that revenue stream falls by approximately 23% at current parallel market premium levels.

If the operating cash flow of US$3.28 million experienced in 2025 is sustained in revenue terms but compressed in effective USD conversion terms by the ZiG policy impact on government sales, the internal resources available for the US$2.406 million capex commitment shrink.

The company then faces three options: draw on the existing loan facility secured against the land, defer or scale back the capex programme, or accept compressed margins on government sales while protecting cash for reinvestment. None of these options is catastrophic as all three are more expensive and more constraining than the 2025 income statement suggests the company needs to contemplate.

Proplastics enters 2026 with a cleaner balance sheet than it has carried in years, a tripled capex budget, a strengthened gross margin, and a disclosed set of risks that individually are manageable and collectively constitute the most challenging policy environment the company has faced since the ZWG monetary transition.

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