Proplastics annual turnover weakens

PLASTIC pipes and fittings manufacturer, Proplastics Limited’s turnover for the four months to April 2017, weakened 9 percent on depressed sales volumes.

Briefing shareholders at the company’s annual general meeting yesterday, chief executive Mr Kudakwashe Chigiya said sales volumes for the four months under review was 13 percent below those of the same period last year.

But gross profit margins for the period improved to 24 percent from 22 percent in the prior comparable period on efficiencies from new machinery the company invested in. The trading environment in the period under review was challenging due to the incessant rains experienced across the country as some projects could not take off resulting in a slow off-take for the year.

Mining and civils were the most affected sectors, which subsequently had a knock on effect on the business.

Proplastics also made a deliberate move to tighten its credit to cushion itself against the economic challenges.

The economy has been characterised by cash shortages, low nostro balances and low disposable incomes.

“We have also tightened our credit policy further as the credit risk in the economy continues to rise. Naturally this has had its effect on sales. Consequently turnover for the first four months of the year is 9 percent below prior year on the back of a 13 percent drop in sales volumes,” he said.

Mr Chigiya said the company would embark on an aggressive push for exports in the year as it seeks to boost its foreign currency coffers and contribution to revenue. In the four months under review, total exports contributed 3 percent to total turnover. Management is also upbeat that going forward demand will increase mainly driven by irrigation which is entering its peak period.

“We expect the upward trend to continue, which will lead to recovery of lost revenues,” said Mr Chigiya adding the company had adequate stock to carry the business forward.