Proplastics maintain cautious outlook

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PIPING products manufacturer Proplastics says it remains optimistic about growth despite mounting economic and political concerns.
This comes as analysts foresee a fragile political and business operating environment as the country draws closer to elections.
“We are positive besides the anxiety that is associated with an election, particularly in Zimbabwe, we remain positive, that is why we are being aggressive on the exports market as part of de-risking the demand that might slow in Zimbabwe,” the chief executive of Proplastics, Kuda Chigiya, told The Financial Gazette recently.
“But there are a couple of projects that are on the table from the government and private players and we foresee these carrying us up until the end of the year.”
The company secured a US$4 million contract in Malawi as it continues to widen its export market.
It has also identified two new export markets in the region that are expected to improve foreign currency revenue streams.
For capital expenditure for the remainder of the year, the firm is looking at just under US$1 million.

This comes as the company has already invested in a new factory and utilisation is about 56 percent.
Sales volumes for the five months increased by 14 percent compared to the same period last year, while sales revenue went up by four percent compared to the same period last year.
Export sales grew by 77 percent compared to the prior year. The overall contribution to total sales was 15 percent, compared to 9 percent for the same period last year.
The target for exports remains at 10 to 15 percent of total sales.
The business has more than two months’ worth of essential raw materials on hand.
The market continues to indicate a preference for US dollars as a method of settlement over the local currency. The company’s revenues remain heavily skewed towards the US dollar at a ratio of 70:30 to ZWL.
On a monthly basis, the company requires
US$2 million for raw materials.
The firm sometimes took part in the foreign exchange auction, with allocations totalling US$1,1 million thus far and US$820,000 being paid out.
On the other hand, Proplastics lost an average of 28 days of production due to power cuts and faults. In monetary terms, that is between US$2,5 million and US$3 million.
As a result, production volumes for the five months to May 31, 2023, dropped by 17,5 percent below prior levels.
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