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Business Reporter

Proplastics revenue grew 4 percent to $1096 billion in the full year to December 2020, but that was too little to prevent a 31 percent fall in before tax profit, weighed down by finance costs.

The piping products producer’s before tax profits in the period under review fell to $173 million from $252 million after finance costs rose from $5,8 million in 2019 to $35,122 million in 2020.

Prosplastics said despite the negative impact of Covid-19 induced lockdown, the group was still able to record a profit before tax of nearly $200 million during the period to December 2020.

After taking into account current and deferred taxes, Prosplastics said after profit for the year was little changed at $84 million from $83,2 million in the prior year.

The group’s total comprehensive income for the year was $244 million while earnings before interest depreciation and amortisation (EBITDA) during the period rolled in at $272 million.

“This is a notable achievement considering that a fixed exchange rate was applied to the foreign currency receipts prior to the introduction of the auction system.

“Thereafter, the rate between the interbank rate and market rate continued to widen yet the group had a significant amount of its revenues receipts in United States dollars,” the group said.

Proplastics said 2020 was difficult due to persistent challenges of foreign currency, which improved after the auction system was introduced in June, as well as disruptions from Covid-19.

The group said the exchange rate however stabilised following the introduction of the auction system, which consequently resulted in an inflation rate slowing down. Statutory Instrument (SI) 85, Proplastics said, improved foreign currency sourcing and eased pressures, as it allowed consumers with free funds to pay using the hard currency.

The group said the year started on a slow note as it migrated to a new factory since the December shutdown. As the group resumed production, it was affected by restrictions from the first lockdown, which remained in force until May 2020.

Although the firm later resumed operations after being classified as an essential service provider, it said demand was negatively impacted because most value chains were disrupted while spending power and key infrastructure projects were curtailed.

“Despite the challenges, the group managed to operate smoothly during the second half of the year, recording a decent performance, thus overturning the slump in the first half of the year.”

Proplastics said the new factory together with an automated mixing plant were now fully operational with production in full swing in the new stage of the art facility. The group is confident that the improving business environment will result in increased growth in demand for its products while investment in the new plant will drive performance.

“We expect demand to continue being underpinned by infrastructural development, mining, agriculture and the borehole drilling segment,” Proplastics said. The group said it will focus on consolidating capital investments made to date.

“To this end, the only major investment in the coming year will be the acquisition of a PVC 500mm extrusion production line, as demand for the large PVC diameter pipes continues to grow yet the current maximum capacity is limited to 400mm.”

Proplastics said in view of the performance for the year, the group proposed a final dividend of 20.50 cents (Zimbabwe dollar) per share, which will have the option to be paid in US dollars.