Proplastics sales volumes plunged 25% on the back of declining consumer spending in the market in the five months to May 31 2019, but higher exports could be the saving grace in the current financial year.
By Melody Chikono
Proplastics CE Kuda Chigiya says his company plans to employ aggressive marketing strategies to lift exports to 10% in FY19 buoyed by the introduction of the new currency that gave the company a competitive edge.
Chigiya told businessdigest this week that while Proplastics was not privy the true intentions of the monetary authorities, the latest monetary measures were likely to work in the favour of its costs structure.
“We are made to understand the arrangement will eventually feed into the interbank foreign currency market. In light if that, we expect improved forex inflows going forward. We had our twining and tolling arrangements that we have been using to get forex. So far the intebank, market has failed to fund our monthly requirements,” he said.
“If it works we are looking at incresing our exports to 10% but of cousse we also leave room for failure.”
Chigiya said exports had only contributed a mere 1% to total turnover in the same period. He, however, fears raw materials imports would be depressed in the face of foreign currency shortages and general problems in the interbank foreign currency market.
Despite the downturn on sales volumes, the manufacturer’s borehole drilling supplies grew 195% as demand in the sector improved. Chigiya said Proplastics requires US$600 000 per month while it needs over a million per month full capacity with 90% of its operations requiring foreign currency.
The company is speading its export wings across the region currently looking at Zambia, South Africa, Botswana and Mozambique.
Chigiya said it is, however, encouraging that in real terms, profitability for the five months is largely in budget and 60% above prior year .
“ Hitherto, we have managed to preserve value for the business but this would be more difficult going foward especially given yesterday’s (Monday) pronouncements. At the beginning of the year, direct US dollar sales were contibuting 15% to converted total sales . This had since shifted converted to +60% before SI 142,” he said.
Financil perfomance in Zim dollar terms was way above prior year on both turnover and bottom line due to inflationery pressuers while direct USD sales improved significantly at the expense of the RTGS.
But concerns over the Zim dollar depreciation against the US unit still loom large.