BY FIDELITY MHLANGA
A TEAM of Italian engineers undertaking software installation at Proplastics’ new plant in Harare had to abort the project during the first half of the year after being recalled to Rome as the COVID-19 pandemic grounded world economies, the firm said this week.
The Zimbabwe Stock Exchange-listed Proplastics hopes to achieve significant efficiencies, trim costs and improve profitability through the US$1 million PVC high-tech facility.
Despite the setback precipitated by the pandemic, production at the facility resumed during the half year ended June 30, 2020, according to chairman, Greg Sebborn.
The company migrated to the new factory during the first two months of this year.
“Production is now in full swing in the new six thousand square metre factory,” Sebborn said in a statement accompanying financial results for the period.
“The structural installation of the hardware for the new mixing plant is also complete. Unfortunately, the mixing plant software could not be commissioned during the period under review as the Italian engineers working on the project were recalled at the onset of the pandemic. It is encouraging to advise that software programming was done remotely and once the conditions allow, the team will be back in the country for the factory acceptance testing on site,” he added.
The firm narrowed its loss to $107,26 million loss during the period, from $135,34 million previously after earnings were eroded by a fixed exchange rate maintained by government before it introduced the currency auction system in June. During the period, the parallel market rate was running amok.
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Exporters were forced to liquidate their forex at a much lower rate than that obtaining on the alternative market, thereby incurring serious losses.
Proplastcis’ turnover retreated by 18% to $195,54 million from $238,45 million.
Volumes dropped by 18% during the period due to the relocation process to the new plant and adverse effects of the COVID-19 induced lockdown.
Overheads increased by 23% due to inflationary pressures and the effects of lockdown and relocation.
“The last three months of the period under review saw the group receiving the bulk of its revenue in United States dollars following the approval by the authorities for consumers to utilise their free funds in settling local transactions. This allowed the group to adequately service its foreign-denominated liabilities within a short space of time,” he said.
Sebborn said the statement of financial position remained solid with total assets amounting to $764,35 million with borrowings remained at minimal levels with a debt to equity ratio of 1%.
“This is particularly pleasing as the expenditure on the construction of the new factory is up to date and waiting for the final account. With the investment outlay on the new factory now complete, the working capital position has started to improve. We expect this position to further improve during the remainder of the year,” Sebborn said.
The group closed with cash and cash equivalents of $20,22 million.
