Zimbabwe’s leading plastic pipe manufacturer, Proplastics, reported a 71 percent increase in revenue for the six months ended June 30, 2018 in the face of challenging operating conditions and difficulties in accessing foreign currency for the importation of raw materials.
Revenue for the period amounted to $10,7 million, up 71 percent on the previous period, with volumes increasing 29 percent, driven by strong demand especially in the first quarter of the year.
The sales performance was matched by a solid plant performance resulting in cost of sales being contained to a 57 percent increase despite the huge inflationary pressures in acquiring raw materials.
Resultantly the Group posted a Gross profit of $3,4 million.
EBITDA improved to $2,2 million from $903 322 and profit after tax was $1,2 million compared to $352 946 in prior period.
The company reported basic earnings per share of 0,50 cents versus 0,14 cents in the prior comparable period. In view of the performance for the period, the board declared an interim dividend of US 0,25 cents per share.
In terms of performance, the first four months were very pleasing and encouraging as the company experienced phenomenal growth in that period, chief executive officer Kuda Chigiya told an analysts briefing yesterday.
“Demand started slowing down in the last two months of the half but it was above average, so the first half performance actually produced, overall, a very pleasing performance with respect to both volumes and revenue,” he said.
Mr Chigiya said performance for the full first half was pleasing, overall, with phenomenal revenue growth coming from civils.
“In terms of revenue contribution by sections we actually experienced phenomenal growth with respect to civils, civils are your large construction companies that partakes bigger projects,” Mr Chigiya said.
He said sales were coming from individual construction initiatives for housing developments and also irrigation from the new farmers that are coming back into that sector.
“We have also managed to get some decent order numbers from the ministry of agriculture the department of irrigation and the Zimbabwe water authority as well.”
The Zimbabwean Government has several support facilities for development and rehabilitation of irrigation infrastructure to improve productivity on farms all year round.
Mr Chigiya gave a breakdown of how individual lines performed in terms of revenue growth.
“In terms of growth in local authorities we reported a growth of about 329 percent, mining 105 percent, borehole drillers, which is actually a new market that is developing phenomenally 80 percent, merchants 69 percent, irrigation 65 percent, civils 57 percent and export up 66 percent.
Mr Chigiya said factory volumes were up 32 percent compared to the same period last year.
In terms of product contribution the famous blue pipe (PVC) volumes were up 32 percent while fittings , those complementary pipes, grew by about 38 percent.
The black pipe, the HDPE grew 101 percent, with orders coming mainly from the mining sector.
“We have come up with an arrangement that they can procure raw materials for us from South Africa and we can manufacture the product here and that’s how we actually managed to record that significant growth in mining,” said Mr Chigiya.
In the outlook, Mr Chigiya said although demand is slightly subdued at the moment, we expect this to improve as we go through the third quarter and into the fourth quarter.
“This will be underpinned by activity in the agricultural and mining sectors as well as infrastructure rehabilitation that is underway,” said Mr Chigiya.
The Company is also in the process of constructing a new factory with progress currently at 55 percent while completion is targeted in the fourth quarter of the year.
“But the equipping will take place in the first quarter of the next year (2019). Deposits for the equipment associated with the new factory have already been affected and the equipment is currently under production.