Farai Mabeza, Senior Staff Writer 
PIPING manufacturer Proplastics says it expects demand to improve underpinned by both public and private sector-initiated projects, although challenges persist in the operating environment.
This comes as the company said it was working hard to ensure that power supply, which it described as its major risk, is mitigated and the market does not suffer supply gaps.
“In addition, we expect the current relatively less turbulent economic environment to remain at least till the harmonised elections,” chairman Gregory Sebborn said in a statement accompanying group financial results for the year ended December 31, 2022.
“The new 500mm PVC line is producing the desired outputs and is effectively fulfilling demand for big bore pipes. Demand for these bigger bore pipes seems to be growing and this augurs well for this investment.
“With the economic environment demonstrating a clear desire to settle transactions in US dollars, indications are that the group will trade more in that currency in the new year as was the case towards the end of the reporting period.
“As a result, the group has shifted to US$ as its functional currency since the beginning of the new year. This, in my view, will enable the group to report more appropriately on its performance going forward.”
Proplastics said that as Zimbabwean dollar interest borrowing rates remained high, it had extinguished all its Zim dollar debts at a substantial cost and opened US$ credit lines with the banks. The resultant impact on cash flows affected the funding of requisite raw materials.
In the same vein, the company said participation on the auction platform would be reduced, as the group utilised its internally generated foreign currency.
“The settlement of foreign currency allocations from the auction platform continued to lag and this caused significant pressures on the payment of suppliers of requisite raw materials.
“The group had no option but to temporarily suspend participation on the auction platform in the second half of the year and instead, focused on generating the much-needed foreign currency from internal resources,” Sebborn said.
“The relative stability that ensued towards the end of the year as well as the success of the various strategies deployed by the board and management in value preservation, ensured the turnaround of the business from a loss-making position at half year to profitability, although at subdued levels, by the close of the year. This augurs well for the future as the group enters the new year with renewed confidence.”
Turnover grew by 23 percent to $11,7 billion (historical $8,4 billion) from $9,5 billion (historical $2,2 billion) in prior year. This was on the back of price adjustments considering economic fundamentals, both locally and globally. Exports contributed six percent to total sales, which was below the internally set target of 10 percent.
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