Listed piping systems producer, Proplastics Limited’s exports volumes for the half year to June 30, 2021 was 240 percent ahead of same period last year helping the group to return to profitability despite operational challenges.
Group chairman Gregory Sebborn, indicated demand for its products remained firm during the period resulting in an encouraging performance despite disruptions caused by factors such as unstable power supplies during the period.
Additionally, going into the second quarter, the world experienced crippling raw material shortages accompanied by global price increases of the main ingredients used in the manufacture of Proplastic’s key products.
The trend was forecasted in the prior year and Sebborn said adequate mitigatory measures had been put in place to minimize supply gaps despite the price increases. According to the group, the factory was, therefore, able to run largely uninterrupted during the period under review.
Sebborn acknowledged the improvements in the economic environment, although the disbursement of foreign currency on the auction platform continued to lag behind despite the liquidation of local balances at the time of participation.
“We urge the authorities to address this matter with urgency as the massive delays are now a huge performance hindrance for industries and the economy at large. Moreso, the gap between the official exchange rate and the alternative market offering continues to widen,” he said in a statement accompanying the financials for the period under review.
Turnover for the period jumped 120 percent to $889 million from $404 million in the prior period on the back of a 71 percent increase in sales volumes.
Cost of sales increased sharply given the global raw material shortages which in turn resulted in sharp upward price adjustments.
Resultantly, Sebborn added, the group recorded a gross profit of $257 million compared to $209 million in the prior period. Overheads were contained to minimum levels during the period and as a result the group posted earnings before interests, tax, depreciation and amortization (EBITDA) of $211 million compared to negative $3 million in the prior period.
Profit before tax also recovered to $140 million compared to a loss of $104 million in the prior period.
The group overturned a $58 million loss to a profit for the period of $57 million.
The statement of financial position remained strong with total assets amounting to $2,1 billion.
Borrowings remained minimal with a debt-to-equity ratio of 2 percent.
Management remains upbeat demand for its products will remain firm going forward.
Said Sebborn: “With the business environment improving, and plans put in place to ensure consistent supply of raw materials, it is expected that the demand for the group’s products will continue to firm, and product supply gaps minimised into the second half of the year.”
However, availability of foreign currency will play a significant role in the group’s operations and ability to meet demand.
The group did not declare a dividend. Meanwhile, its new PVC 500mm extrusion production line is expected at the end of the year, for commissioning in the first quarter of 2022.
This new line will help address the demand for large bore PVC diameter pipes, which continues to grow and will increase production capacity.