PLASTIC pipe manufacturer Proplastics Limited’s profit after tax more than trebled to nearly US$520 000 in the year ended December 31, 2023, on the back of a huge cut in finance costs which went down by 85%.
In the comparative 2022 period, Proplastics posted a profit of US$164 482 with finance costs amounting to US$686 304 during the period.
However, for the period under review, the firm’s finance costs dropped to US$103 847.
The drop in finance costs comes as the firm has now adopted the greenback as its reporting currency owing to the volatility of the Zimbabwe dollar had lost over 700% of its value during the period under review.
“Turnover for the full year grew by 22% to US$21,3 million from US$17,4 million in the prior year. The growth was underpinned by a 22% increase in sales volumes compared to prior year,” Proplastics board chairperson Gregory Sebborn said, in a statement accompanying financial year results for the year ended December 31, 2023.
“The contribution from the recently commissioned new plant was significant and should continue anchoring sales volumes going forward. Exports sales recorded a 102% growth, with a contribution of 11% to total sales. The group secured lucrative contracts in the region some of which will continue into the new financial year.”
Sebborn said the cost of sales rose up by 47% with gross profit margins dipping 13%, on the back of reduced selling prices in the face of competitive pressures in the market.
The drop was also attributed to the firm aligning its business costs to United States dollars as a functional currency.
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“Certain elements of cost of sales, for instance electricity tariffs, rose sharply during the year under review. Gross profit for the group was US$6,4 million, compared to US$7,3 million in the prior year,” Sebborn said.
“Overheads fell 4% from the prior year. Profit before tax of US$1,4 million was significantly higher than the prior year figure of US$893000. EBITDA was US$2,5 million, up from US$2,2 million in the prior year.”
However, the statement of financial position reduced slightly with total assets amounting to US$22,8 million compared to US$24,6 million in the prior year as the group used available resources to reduce its liabilities, in particular foreign obligations.
“The valuation of property, plant, and equipment for the purposes of conversion to a US$ functional currency was carried out using United States dollar-based inputs at the date of conversion,” Sebborn said.
“The prior year figures were restated accordingly. The current ratio closed the period at 1,37, which is an improvement from 1,11 in prior year.”
The gearing ratio remained manageable at 1,5%, thus providing room for the group to leverage borrowings to fund operations.
