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Proplastics sees improved FY18

Proplastics top line is seen rising 56% in the current financial year to US$25 million buoyed by a strong order book in its various business segments, a company official said.

By Melody Chikono

Proplastics CE Kuda Chigiya told businessdigest on the sidelines of the company’s interim results that the firm was ambitious and would see turnover rising by 56% by year-end.

“We are quite ambitious. We are looking at growth of 56% from the previous year. That will give us turnover of about US$25 million. However the major challenge remains availability of foreign currency but we also anticipate a steady increase in the third quarter which is our peak period.”

Although demand is slightly subdued at the moment, it is expected to improve going into the Q3 and Q4 2018.

This will primarily be underpinned by activity in the agricultural and mining sectors as well as infrastructure rehabilitation that is underway.

In the half year to June 31 2018, the company saw an increase in turnover to US$10,7 million on 2 600 tonnes.
During the H1, revenue at US$10 762 251 was 71% up from the previous year’s figure of US$6 278 150, with volumes increasing by 29% driven by a strong demand, especially in H1.

The solid performance was matched by a solid plant performance resulting in cost of sales being contained below 57% despite huge inflationary pressures in acquiring raw materials.

Overheads increased by 39% due to inflationary pressures in the economy, while financing costs rose to US$39 026, pushed by costs incurred in establishing new facilities with the banks.

Chigiya said the factory is currently at 60% capacity utilisation.

“In terms of utilisation, we are at around 60% as a result of the economy being slow in general. You would appreciate that utilisation is demand driven. As a result, we anticipate that demand will start pickingup as normalcy returns. Post-election, we foresee our capacity utilisation improving significantly,” he said.

The company is currently constructing a new factory, which is now at 55%.

It is envisaged that construction will be completed by Q4, but the equipping will take place in Q1 2019
Management said the company’s operations required foreign currency estimated at around US$700 000 while 25% would be sourced locally.

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