18 September 2017

Zimbabwe: Proplastics Targets Increased Exports

Plastic pipe systems manufacturer, Proplastics, is targeting to increase exports to the "ideal 10 percent" from the current two percent as the group has started picking up orders from as far as Sierra Leone.

The focus on exports in sweetened by the five percent initiative offered by the Reserve Bank of Zimbabwe to exporters.

As at June 30, a total of $175 million had been paid out under the export incentive scheme to exporters and this has enticed a number of manufacturers including Proplastics. The group is targeting Zambia, Mozambique and the Democratic Republic of Congo as low hanging fruits for exports.

"Exports is an area we will be pursuing aggressively. We are already now into Zambia. We also picked up some descent orders from Sierra Leone," chief executive officer Kuda Chigiyo told an analysts and media briefing on the unaudited results for the half year to June on Thursday.

Mr Chigiyo said turnover increased seven percent to $6 278 150 in the six months compared with $5 879 529 in the prior year while sales volumes at 2 037 tonnes were four percent higher on the comparative period.

Average selling prices increased by three percent from prior year.

Factory volumes were, however, five percent behind the comparative period in the prior year. Currently the group holds about a month's cover of critical raw materials. Normally Proplastics holds about three months cover for raw materials.

Prospects for the listed pipe systems concern were positive as a number of initiatives employed were paying dividends. The initiatives, including modernising the factory, focus on exports and an increase on marketing spend to enhance brand awareness.

"We see demand of our products surging, everybody is building a house. There are also initiatives from Government, and agricultural schemes. The mining sector has also started picking up. So we see ourselves improving even further in the second half. Agriculture, mining and housing development and other construction projects are the demand drivers," said Mr Chigiyo.

Proplastics expects to start construction of a new 5 100 square metre factory to replace the current 54-year old property to lift the company to a world class producer.

A new Special Purpose Vehicle will be established while negotiations with potential financiers and partners in the project were at an advanced stage so that construction will commence this third quarter.

"All the approvals have gone through and all the stakeholders have been engaged and that project will be starting very soon. We are setting up a special purpose vehicle where we are coming with the land, we need the financiers and a contractor. The factory will come complete with all the auxiliary equipment in such a way that we actually become a world class producer," said Mr Chigiyo.

Construction of the factory is expected to take about one year.

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