Proplastics volumes surge on high demand
PROPLASTICS says demand for its products was strong across all business categories, for the quarter to September 30, 2021, resulting in volumes growing by 36 percent compared to the same period last year.
Gregory Sebborn, the group’s chairman, said in a trading update export volumes grew 178 percent during the quarter under review, thereby contributing 13 percent to total volumes.
“Driven by the growth in volumes, revenue for the quarter increased by 225 percent from the same period last year in historical cost terms and 72 percent in inflation adjusted terms,” he said.
He added that although the business experienced a drop in margins due to the everincreasing cost of raw materials, a strong earnings performance was recorded overall for the quarter.
Proplastics is Zimbabwe’s leading plastic pipe manufacturer, specialising in the manufacturing of Polyvinyl Chloride, High-Density Polyethylene, Low-Density Polyethylene pipes and related fittings.
The pipes are manufactured for various applications in irrigation, water and sewer reticulation, mining, telecommunications and building construction.
Mr Sebborn said plant availability for the period under review was 92 percent with capacity utilisation standing at 60 percent. Current ratio improved to 1,6 from 1,4 recorded as at 31 December 31, 2020 while gearing ratio was at 10 percent at the close of the quarter.
Mr Sebborn highlighted that the group expects resilient performance in the last quarter provided that costs, foreign currency and electricity shortages are addressed.
He said during the period under review, the Group faced shortages of raw materials accompanied by price increases of the main ingredients used in the manufacture of its key products.
“This position is further worsened by shipping costs which have ballooned by 480 percent,” he said.
He also noted that shortages of electricity and foreign currency on the auction floor to import raw materials hindered the business performance, forcing the Group to turn to generators for power supply.
Looking ahead, Mr Sebborn said demand for the group’s products remained strong with plans put in place to ensure adequate supply of raw materials.
As a result, he noted that the group is geared to post a reasonable full year performance if the various risks are mitigated.-The Herald
