COVID-19 to affect Proplastics volumes

The COVID-19-induced nationwide lockdown, which came into effect on March 30 as part of measures by the government to curb the spread of the deadly pandemic, will affect Proplastics Limited (PROL) volumes for the year, the company recently announced.

The Zimbabwe Stock Exchange-listed concern is a supplier of piping systems for water and sewer reticulation and is operating from Harare with a distribution branch in Bulawayo.

A number of businesses across the country including those providing essential services which were allowed to partially operate during the lockdown had their operations severely disrupted.

In a recently issued first quarter 2020 and lockdown performance special trading update, PROL chairman, Gregory Sebborn, said the COVID-19 lockdown has had a bearing on the company’s operations.

“Overall, the lockdown and the pandemic will affect our volumes for the year, and we currently estimate the effect to be around 30 percent of the planned budget,” said Sebborn.

“We still see the effects of the pandemic taking its toll on the business for the greater part of the year. However, we do not see a significant threat to the continuity of the operations or solvency position as a going concern.”

He said their operations under lockdown had been at a reduced level.

“Activities in the economy have been subdued since the announcement of the lockdown, but the business has taken the window to improve on stocking levels for the fast-moving products as well as the supply of critical pipes that were needed in the fight against the pandemic,” said Sebborn.

The company, whose first quarter sales tonnage was 14 percent below the same period last year, has put on halt the commissioning of the new mixing plant as a result of COVID-19.

Sebborn however said, the decision by the government to allow customers with free funds to pay for goods and services in foreign currency during the lockdown period, saw the company register an improvement in United States Dollar purchases.

“We have not had serious disruptions on the supply of raw materials and we continued to receive supplies during the lockdown period. The liquidity position of the business remains solid with local suppliers adequately covered and the clearing of foreign obligations a priority. Since the beginning of the year, the supply of utilities, in particular, electricity has been stable and this was a boost to production.”

He also said there have not been credit risk concerns as the trading terms for the business is predominantly cash upfront owing to the operational environment in the economy.

“It is very unfortunate that the business had to terminate some contract employees and work with minimal headcount,” said Sebborn.

“The business has also implemented all precautionary measures as announced by both the local and international health institutions in preventing the spread of the pandemic within the workplace.

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