PPC revenue falls 17pc on low volumes

Source: The Herald – Breaking news.

PPC revenue falls 17pc on low volumes 
Pretoria Portland Cement (PPC) Zimbabwe suffered a 17 percent revenue decline on the back of subdued volume performance for the financial year 2023 (FY23).

Enacy Mapakame

Business Reporter

Pretoria Portland Cement (PPC) Zimbabwe suffered a 17 percent revenue decline on the back of subdued volume performance for the financial year 2023 (FY23).

The group said the impact of the planned extended kiln shutdown in the first half of the year for special maintenance and the installation of the bag house and bucket elevator resulted in limited clinker production and ultimately restricted the volumes of cement sold.

Additionally, plant stoppages due to power interruptions negatively affected performance.

As a result, volumes year-on-year were down 16 percent despite robust cement demand from concrete product manufacturers and Government-funded infrastructure projects.

However, the Government reduced the number of import licences in January 2023, which will support the recovery of PPC’s market share.

During the review period, PPC Zimbabwe was able to implement US dollar price increases to recover input cost inflation.

Further, PPC Zimbabwe continued to generate adequate sales in foreign currency to sustain its operational requirements during the period and pay dividends.

PPC Group, the parent company of PPC Zimbabwe, received US$8,9 million in dividends during the year totaling R147 million net of withholding tax (compared to US$6,2 million in the prior year).

Earnings before interest, tax depreciation and amortisation (EBITDA) went down by 7 percent to R365 million, but margins increased to 20,8 percent due to price adjustments.

The group continues to focus on sound capital allocation principles, maximising cash generation from its South African and Botswana businesses (the SA obligor group) and extracting cash from its investments in Zimbabwe and Rwanda (the International Businesses).

“Historically, dividends from Zimbabwe have contributed to the deleveraging of the group’s South African balance sheet,” said the group in an earnings update.

Total group revenue was flat at R9 902 million. Its Rwanda operations – CIMERWA recorded a 29 percent increase in revenue but was more than offset by the reduced contribution of PPC Zimbabwe.

Including the International Businesses, the cost of sales and administration and other operating expenditures was flat at R9 425 million. Zimbabwe’s costs decreased by 23 percent, which more than offset CIMERWA’s cost increases (in rand) of 26 percent.

Group EBITDA, including international businesses, declined by 9 percent to R1 358 million. While CIMERWA’s EBITDA increased by 31 percent, it was partially offset by a reduction in PPC Zimbabwe’s contribution of 7 percent.

Capital investment remained disciplined and reduced to R415 million from R553 million largely attributable to South Africa and Botswana Cement (R53 million reduction) and Zimbabwe (R69 million reduction).

Going forward, PPC will continue to focus its resources on Southern Africa while preserving its market position in Rwanda. The group also anticipates a continued recovery in Zimbabwe while the outlook for CIMERWA in Rwanda remains positive.

“There is a need for further operational efficiencies and cost containment measures to mitigate rising input costs as the economic climate in its key South African market remains muted and competition remains high across the portfolio,” said PPC.

COMMENTS

WORDPRESS: 0