Engineering plastic manufacturer, Proplastics Limited posted a ZW$ 264.8million loss for the six months to June (HY) as compared to a profit of ZW$ 165 million same period last year due to exchange losses in the procurement of imported raw materials and also rising administrative costs.
Margins were affected by rising operational costs due to hyper-inflation and the devaluation of the local currency against major currencies.
In its interim results statement, volumes retreated 2 percent compared to similar period last year due to unstable supply of electricity causing interruptions to production with the business having to shut the factory on several occasions.
“It is estimated that business lost approximately 19 days of production due to power supply interruptions during the period,” the company said.
Turnover grew 21 percent to ZW$ 3.1 billion from ZWL 2.6 billion (historical ZWL 836 million) in prior year on the back of price adjustments considering local and global economic fundamentals.
“Exports contributed 8% to total revenue in the period under review which is just under our target of 10%. It is still important to note that a significant portion of the Group’s revenue was recorded at the auction interbank rate having been received in United States Dollars. Although there was a significant movement in the rate during the period under review, the gap with the alternative market rate remained high.”
Exchange losses amounted to ZW$ 255 million for the period, compared to ZW$ 29 million in prior period. Outstanding foreign obligations as of 30 June 2022 amounted to US$3.7 million.
As a result, the Group recorded an EBITDA of ZW$ 297 million compared to ZW$ 616 million in the prior period. The Group recorded a break-even position before tax and loss position after tax of ZW$ 264.8 million.
The debt equity ratio remained low at 7 percent at the close of the period.
“The Group will be leveraging on this and will increase its borrowings to improve working capital position and enable direct and smart procurement of imported raw materials for the business.”
