26 June 2019

Zimbabwe: Forex Shortages, Power Cuts Choke Proplastics Operations

Proplastics Limited says current foreign currency shortages and power cuts were choking the operations of the pipe manufacturer.

In a recent trade update, Proplastics Limited chief executive, Kudakwashe Chigiya told NewZimbabwe.com Business that forex challenges were negatively impacting on the company's viability.

"Excruciating foreign currency shortages and the decapitating supply of electricity and water has subdued demand for our product.

"The deteriorating disposable incomes for capital projects and individuals and further erosion on economic performance added to the general lack of market confidence remains a challenge for the company," he said.

In the first five months of 2019, the company recorded a hugely depressed local demand for the products as sales volumes stood at 25 % lower as compared to the previous year.

All sectors were affected except borehole drillers which grew by 195% in volumes compared to prior year as demand in that sector surged.

"Direct US$ sales had improved significantly at the expense of the RTGS$ at the beginning of the year. Direct USD sales were contributing 15% to converted total sales. This had since shifted to +60% before the Statutory Instrument 142," Chigiya said.

However, in light of the recently announced SI 142 which outlawed the use of multiple currencies, the company expressed pessimism over its ability to preserve value.

Going forward, the pipe manufacturing concern has planned to target balance sheet preservation, smart partnerships with all stakeholders and high return on sales ratio and employee welfare.

The company has invested US$9 million towards the upgrading of its operations in the past four years as it targets the local and regional markets.

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