PPC Zim remits US$11,3m dividend to SA parent group

PPC Zimbabwe remitted R203 million (US$11,3 million) dividend to its South African parent group following strong volume performance in the full year to March 31, 2024.

Group chief executive officer (CEO), Mr Matias Cardarelli, said: “Record volumes were achieved in the first half of the year with a growth of 44 percent compared to the same period in the previous year, despite growth slowing down in the second half, with the quarter on quarter volume increase falling to 3 percent in the final quarter.”

Challenges in the second half of the year, including reduced activity in Government construction projects, changes in tax regulations for the informal sector and an influx of imports, continued into the new financial year.

The Zimbabwean operation’s results were driven by a revenue growth of over 52 percent in the year, which was primarily due to volume growth and higher selling prices.

Mr Cardarelli said during the first half of the year, the environment was advantageous characterised by strong demand and restrictions on competing cement imports.

After a maintenance shut-down the previous year at Colleen Bawn in Gwanda, operations were stabilised with strong clinker production, although it remained below potential capacity.

This resulted in a rise in clinker imports and elevated production costs.

Furthermore, a 76 percent increase in electricity tariffs during the second half of the year further affected production expenses.

Although increased sales and favourable pricing positively influenced the situation, rising production costs adversely impacted earnings before interest, taxes, depreciation, and amortisation (EBITDA).

At group level, revenue rose by 20,6 percent to R10,058 billion, largely fuelled by robust performance in Zimbabwe, where revenue jumped by 91 percent in rand terms to R3,346 billion.

South African and Botswana cement revenue grew by 5,2 percent to R6,080 billion.

Sales of clinker to Zimbabwe and price hikes compensated for the reduction in cement sales volumes.

“However, the aggregates, ready-mix, and ash division saw a revenue decline of 6 percent to R1,031 billion, mainly due to decreased ready-mix demand,” said group chief financial officer (CFO), Mrs Brenda Berlin.

In the period under review, PPC’s EBITDA rose by 38,6 percent to R1,242 billion, with an improvement in the EBITDA margin to 12,3 percent.

The materials division experienced an increase in EBITDA due to a one-time non-cash item, while Zimbabwe’s EBITDA margin slightly decreased to 20,2 percent.

HEPS from continuing operations rose to 19 cents, compared to a loss of 20 cents in the previous year, while EPS increased to 6 cents up from a loss of 21 cents in 2023.

“In the year under review, we not only improved our free cash flow before financing activities, but also strengthened our liquidity position and overall financial health.

“This growth is evident in the growth of both HEPS and EPS, from the losses of the previous year,” she said.

The board declared a gross cash dividend of R213 million, equating to 13,7 cents per share.

However, finance costs increased marginally to R131 million, driven by higher interest rates and capitalised leases.

The group cost of sales increased by 16,3 percent to R8 409 million attributed to Zimbabwe, as costs in South Africa and Botswana decreased by 1,3 percent due to lower sales volumes. Additionally, administration and other operating expenses rose by 5,5 percent.

On January 25, 2024, PPC sold its 51 percent shareholding in CIMERWA for US$42,5 million, resulting in an accounting profit of R197 million.

“At the time of disposal, the total net asset value attributable to PPC was R612 million and the consideration received was R809 million, resulting in a profit on disposal of R197 million,” said the CFO.

In line with debt and cash holdings, Group debt in South Africa and Botswana fell to R779 million, primarily due to a scheduled repayment on the amortising term loan.

Meanwhile, cash reserves from continuing operations increased to R857 million

PPC International Holdings received US$42,5 million from selling its stake in CIMERWA, with R783 million of that amount remaining available at year end.

“Zimbabwe remains debt free with unrestricted cash holdings of R40 million as of March 31, 2024,” added the group CFO.-herald