PLASTIC pipe manufacturer Proplastics Limited says exports contributed about 15% of its total sales in the half year ended June 30, 2023, as the group managed to secure significant supply contracts in the region.
In a statement accompanying the firm’s financial results, Proplastics board chairman Gregory Sebborn said increasing export performance will remain a key focus area for the group.
The group's exports market includes countries like Zambia, Mozambique, the Democratic Republic of Congo, Malawi, and Botswana.
“Turnover grew by 23% to US$10,5 million from US$8,5 million in the prior year,” Sebborn said.
“This was on the back of a 19% increase in sales volumes over the same period.
“Exports contributed 15% to total sales as the group managed to secure significant supply contracts in the region.”
He said the cost of sales grew by 23% largely driven by expensive generator backup power and higher priced legacy raw materials acquired during the Covid period, and now fully utilised.
The group recorded a gross profit of US$3,3 million, compared to US$2,7 million in a similar period last year.
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Ongoing operating expenses reduced by 13% as the group “continued with its cost containment drive.”
Profit before tax of US$1 million was recorded compared to US$105 000 recorded in the similar period last year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was at US$1,6 million, up from US$811 000 in the prior period.
Resultantly, the group managed to record a profit after tax of US$561 000, up from a negative US$723 000 in the prior period.
Sebborn said the group’s financial position remained strong with total assets amounting to US$27 million, with the current ratio closing the period at 1.28.
“The gearing ratio remained very low at 1,4% as the group extinguished the expensive ZWL (Zimbabwe dollar) loans at the beginning of the year,” he said.
The low gearing ratio will provide some leverage as the group seeks to bolster its working capital requirements.
Gearing ratio is a general classification describing a financial ratio that compares some form of owner equity (or capital) to funds borrowed by the company.
The group closed the period with cash and cash equivalents amounting to US$282 000.
The group is expecting the US dollar transactions to remain dominant and is hopeful for a stronger performance in the second half of its financial year.
“The environment is showing that customers prefer to settle transactions in USD, and we expect this trend to largely continue into the second half of the year,” he said.
“The supply and pricing of raw materials is expected to remain stable on the global market and this should help in augmenting demand for our products.
“The new investment of the 500mm production plant contributed 47% to total revenue in the period and we anticipate this trend to continue.
“Overall, we expect a stronger performance in the second half of the year.”