PLASTIC pipes and fittings manufacturer, Proplastics Limited, recorded a strong performance in the first six months of 2018 with a 70 percent jump in revenue from $6,3 million to $10,8 million when compared to the same period last year.
During the period, the company’s profit clocked $1,2 million from $352 000. Sales volumes also surged and chief executive officer, Mr Kudakwashe Chigiya, attributed the trend to growing domestic demand following import control measures by Government.
He told Business Chronicle in an interview on the sidelines of the company’s annual conference in Bulawayo yesterday that they were elated by the positive growth in a challenging macro-economic environment.
Proplastics supplies a diversity of clients such as local authorities whose business with the firm grew by 329 percent. Business with mining entities also surged by 105 percent and borehole operations 80 percent, said Mr Chigiya.
“Merchants closed the half year period at an impressive 69 percent, irrigation grew by 65 percent, civils at 57 percent, while exports grew by 26 percent,” he said.
Recent financial statements show profitability of the company is already two times higher than the previous financial year. Mr Chigiya, however, said the company was facing challenges in securing raw materials as they struggled to get foreign currency.
“At the moment about 99 percent of our raw materials are imported. Importing these materials needs foreign currency. Our last RBZ allocation as an ‘A’ category company was in November 2017. This makes it very difficult for us as a company,” he said.
Mr Chigiya said the company needs over half a million dollars to meet operational costs each month and that the bulk of these funds should be in foreign currency.
“Due to the unavailability of foreign currency, we experienced product supply gaps caused by failure to import raw materials,” he said.
“We have also made twinning arrangements with local traders for the supply of the requisite raw materials. However, this is about 60 percent more expensive than direct imports.”
Mr Chigiya, however said raw material supplies were presently stable with the factory running uninterrupted as they have approximately one and a half months cover on raw materials. He said the firm remains focused on construction of its new factory in Harare with progress now above 50 percent level. The firm has no plans to invest in Bulawayo where it runs a distribution centre.
Going forward, Proplastics expects demand to remain strong driven by agriculture, local authorities, mining and housing development.
“We are optimistic that the current efforts to revitalise the economy will bear fruit in the short-to-medium term. But we think the path to full recovery will still be slow and painful. We are therefore, bracing for a largely challenging operating environment in the short term,” said Mr Chigiya.
- Chronicle
