Proplastics gross profit up 24pct in Q1, turnover down

Proplastics gross profit up 24pct in Q1, turnover down

HARARE, May 23 (The Source) – Plastic products manufacturer, Proplastics on Tuesday said  turnover for the first four months to April 30 was 9 percent below comparable period last year, with sales falling by 13 percent over the prior period.

The decline in sales volumes was due to the adoption of a cash model to avoid high credit risk.

Chief executive, Kuda Chigiya told shareholders at the company’s annual general meeting that the heavy rains which hit the country earlier this year caused a delay in the company’s projects.

“We have seen demand starting to improve in the current month and we expect the upward trend to continue which will lead to recovery of lost revenue. The demand is mainly driven by irrigation, which is entering its peak period,” said Chigiya.

However, gross profit margins increased to 24 percent from 22 percent in the prior year on improved efficiency following the commissioning of new machinery.

Proplastics commissioned a new $1,5 million PVC plant to increase production by 60 percent from 600 tonnes monthly in November last year.

otal exports contributed three percent to turnover for the period.

Chigiya told shareholders that the business remained profitable in the period but below last year’s levels.

The construction of a new factory, which was expected to start in the the first quarter was deferred to the second half of this year, and is awaiting board approval.

The company, which imports about 80 percent of its raw materials said it has received support from its bankers and the central bank to settle obligations to foreign creditors.

“I am happy to inform shareholders that we are up to date with our foreign creditors, with our requests for foreign funding constantly being met,” Chigiya said.

“We have sufficient cover of the main raw material stock to carry the business forward.”