PLASTIC pipe manufacturer Proplastics Limited says uncertainty over currency has fuelled adverse market reactions, particularly in the last quarter of 2018, resulting in significant pricing distortions which led to subdued demand for its products, although performance remained strong across all its units.
In full-year 2018, Proplastics posted a $3,5 million profit, up from $1,35 million in the prior year, while turnover rose 50% to $24 million.
Sales volumes increased 5% to stand at 5 261 tonnes.
Proplastics CE Kuda Chigiya yesterday told an analyst briefing that while the company improvised in other areas, the single major challenge of foreign currency remained.
“Uncertainty over monetary policy fuelled adverse market reactions particularly in the last quarter of 2018, resulting in significant pricing distortions, leading to subdued demand for our products. The single most difficult challenge remained securing foreign currency for the importation of raw materials and capital equipment. We, however, managed to source raw materials from local traders but at high premium. Solid performance was posted for the year characterised by growth in both volumes and revenues,” he said
Chigiya said demand was strong in the first nine months of the year, but was negatively affected by economic instability in the last quarter of the year.
He said the company remains optimistic that the current efforts to revitalise the economy will bear fruit in the short to medium-term but is bracing up for a largely challenging operating environment in the short term.
Cash generation was at 115% of revenue while cash generation for December 2017 was at 26%.
Cash and cash equivalents came down to $1,1 million as at December 2018.
Chigiya said plant availability during the period was 9% compared to 88% prior period mainly due to major equipment overhaul on downstream equipment in January 2018.
“In addition, plant availability improved due to strict adherence to the master maintenance schedule supported by availability of spares. Major challenges remains availability of foreign currency.
“The monetary policy has ushered in new trading platform parameters which include a new RTGS the RTGS dollars, as the reporting currency. We are yet to see the full impact of the policy announcements,” he said.
In the outlook, he said completion of equipment installation for the new factory is now at 97%. The commissioning of the plant is now expected in the second half of 2019.
“The investment will position us to compete well, particularly in the export market,” he said.