Proplastics reduces prices to drive volumes

Proplastics revenue for the six months to June 30 dropped 11 percent to $5.879 million compared to $6.604 million in prior year largely on the back of reduced selling prices as the group adopted a strategy to trim margins and drive volumes.

Profit after tax for the period dipped 65 percent to $91 243 from $262 896 in the prior year.

Chief executive Kudakwashe Chigiya told analysts that the drop in gross profit margin from 22 percent to 21 percent was offset by improved factory efficiencies while volumes were maintained at last year’s level.

“We anticipate that the introduction of new machinery will increase production efficiencies thus lowering unit costs further,” he said.

During the period, overheads grew 11 percent as the company incurred some staff rationalisation expenses in order to align staffing levels to current business volumes.

Earnings before Income Tax Depreciation and Amortisation (EBITDA) dropped 33 percent to $529 097 in the half year period under review.

Looking ahead, Chigiya said despite the persisting economic challenges, demand for the company’s products has started to pick up underpinned by housing development projects and the rehabilitation of the old piping infrastructure.

“Projects are still being carried out through private public partnerships and non-governmental organisation. In addition to that, recent orders for the mining projects have been very encouraging and will boost performance in second half of the year,” he said.

Chigiya added that the introduction of SI 64 of 2016 which restricts importation of an array of products including plastic pipes will result in increased local demand for its products.- The Source

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