Forex crisis throws Proplastics off balance

ZIMBABWE’s biggest piping products producer, Proplastics Limited, says it has struggled to service foreign currency-indexed debts as auction floor bottlenecks intensify.

The firm said as a result of the forex challenges, unsettled debts to foreign creditors during the half year ended June 30, 2021, were US$1,7 million.

Despite being credited for saving industries in the past year, the Reserve Bank of Zimbabwe’s foreign currency auction system ran into problems during the first half of this year, with allotments taking up to two months to be released to companies.

The Confederation of Zimbabwe Industries indicated that businesses were struggling to timeously service foreign currency-indexed debts as a result of the bottlenecks.

“The position exposes the group to huge exchange rate risks as well as having a negative impact on supplier relations.

“We urge the authorities to address this matter with urgency as the massive delays are now a huge performance hindrance for industries and the economy at large.

“Moreso, the gap between the official exchange rate and the alternative market offering continues to widen,” Proplastics said, referring to the recent battering of the Zimbabwe dollar on the parallel market.

Despite foreign currency constraints, the company noted that the world experienced crippling raw material shortages in the second quarter, accompanied by global price increases of the main ingredients used in the manufacture of its key products.

Power supplies were also interrupted regularly during the period. The firm’s inflation adjusted profit for the period was $57 million, compared to a loss of $58 million during the same period last year.

Turnover grew by 120% to $889 million from $404 million in the prior period on the back of a 71% increase in sales volumes. Exports grew by 240% and contributed 11% of total turnover during the period.-newsday