Proplastics sets annual capex at $2,6 billion

PIPING products manufacturer, Proplastics, has set annual capital spending at $2,6 billion despite reporting an 86 percent dip in its 2022 inflation adjusted profit.
A total of US$2,7 million was spent by the group on capital equipment in the nine months ended September 30, 2022.
This includes the newly-commissioned PVC line. The plant modernisation efforts saw improvements in efficiency. This year’s targeted capital expenditure is 73,33 percent higher than the same period last year.
“Capital expenditure for the year ending December 31, 2022 amounted to $1,14 billion in inflation adjusted terms and $722 million in historical terms,” chairman Gregory Sebborn said in the company’s 2022 annual report, adding “The budgeted capital expenditure for the year to December 31, 2023 is $2,6 billion. The capital expenditure for 2022 was financed from internal resources and existing facilities.”
Like any other business operating in Zimbabwe, the group was not spared from the persisting foreign currency shortages, multiple exchange rates and inflationary pressures.

“Inevitably, given the movement in exchange rates and the fact that the group imports about 90 percent of its raw materials, thus holding significant amounts of foreign liabilities at any given point, the Group recorded net exchange losses amounting to $896 million. This is compared to prior year net exchange loss of $146 million,” Sebborn said. The group realised a turnover growth of 23 percent to $11,7 billion from $9,5 billion in the prior year on the back of price adjustments considering economic fundamentals, both locally and globally.
Given the continued economic issues and weak domestic demand, sales volumes were down seven percent from the previous year. The percentage of exports to total sales, which was six percent, fell short of the internal goal of 10 percent.
“It is important to note that a significant portion of the group’s revenue was recorded at the interbank rate, having been received in US dollars. With the gap between the official and alternative market still significant, this had an impact on the recorded revenues.”
The group posted a gross profit of $4,9 billion, up from $3,2 billion in the prior year.
“As cost of sales were managed to increase by only seven percent on prior year, on the back of operational efficiencies in the new factory and more direct and smart procurement of raw materials, gross profit margins improved significantly to 42 percent from 34 percent in the prior year,” Sebborn said.
With total assets of $18 billion, the group’s financial situation remained solid.
The current ratio was 1,11 at year’s end. The gearing ratio stayed low at three percent, providing the group with the opportunity to borrow more money to pay for raw mat