Proplastics, a Zimbabwean manufacturer of piping products, has navigated through challenging economic waters to post defensive financial results. Despite slowdowns in the third quarter of 2023, the company has successfully leveraged the foreign auction system to secure a sufficient supply of raw materials to maintain market stock availability.
Overcoming Currency Challenges
In the face of difficulties accessing Zimbabwe Dollar inflows and a prevailing preference for USD sales, Proplastics has managed to stay afloat. The company announced that 90 percent of its transactions in the nine months leading up to September 2023 were conducted in USD. This reflects the market’s favor for the robust American currency over the volatile Zimbabwean Dollar. In this challenging environment, Proplastics’ sales volumes increased by 24 percent, reaching an impressive 4,987 tonnes. Consequently, the company’s revenue grew by five percent to $16.1 million.
Adaptation and Expansion
Proplastics isn’t just surviving; it’s innovating. The company recently launched a plastic tank manufacturing project and is preparing for a solar project to power its plant. Expected to be completed within the next six months, this initiative will counteract the frequent power outages plaguing the country and improve the company’s carbon footprint. It’s an investment in sustainability and resilience.
Improving Financial Health
Proplastics’ fiscal health is also on the mend. The company’s current ratio—a key financial metric indicating a company’s ability to pay short-term and long-term debts—improved from 1:1.11 in December 2022 to 1:1.37. Furthermore, Proplastics has managed a 25 percent reduction in total creditors since then. While the company operates at lower levels, it remains profitable and expects continued demand for its products in the domestic market.
Despite the challenges, Proplastics has managed to stay ahead through innovation, careful financial management, and a relentless focus on market supply. The company is poised to break even for the year ending March 31, 2024, in US dollar terms.