PPC Zim sees 4.5% revenue decline in July; ZSE in 22% monthly gain

HARARE – PPC Ltd, says in the four months ended July 31, 2024, PPC Zimbabwe experienced a revenue decline of 4.5%. This was a more significant decrease compared to the revenue performance in South Africa and Botswana, which saw a decline of only 1.0%. PPC reported a group revenue decline of 2.1% compared to the same period last year.

According to the group’s trading update, the decline in Zimbabwe’s revenue was attributed to a significant drop in cement sales volumes, which decreased by 10.9% year-on-year. Overall, Zimbabwe contributed 30% to the group’s revenue during this period, down from 33% for the twelve months ended March 31, 2024.

Despite the revenue challenges, PPC highlighted that average cement selling prices increased across the group, which helped to mitigate some of the revenue losses. Cement remains the core business for PPC, contributing 90% of the group’s revenue, while materials accounted for the remaining 10%.

The company noted that while EBITDA margins were under pressure, particularly in South Africa where they fell from 11.6% to 10.3%, there were positive signs in cash generation. Net cash generation from the South Africa and Botswana group improved from R129 million to R192 million, primarily due to better working capital management.

PPC’s operations in Zimbabwe faced additional challenges, including rising electricity tariffs, which prompted a price increase of 4% in January 2024. Despite these pressures, PPC Zimbabwe managed to maintain an EBITDA margin of 29.0%, only slightly down from 29.8% in the prior period.

Looking ahead, PPC remains focused on its turnaround strategy, which includes enhancing organizational culture, optimizing processes, and improving supply chain efficiency. The company is optimistic that these efforts will yield positive results in the upcoming financial year.

As the South African economy shows signs of improvement with declining interest rates, PPC is cautiously optimistic about future growth. However, the overall outlook for the group remains subdued, with no clear evidence of large-scale infrastructure or retail developments on the horizon.

Meanwhile, Zimbabwe Stock Exchange shares closed off September trades in negative territory amid heightened economic uncertainty in the wake of resurgent inflation and significant value erosion.

The All Share Index was down 0.45% to 244.74 in a session which, however yielded positive market bias after 11 stocks recorded gains against eight fallers. For the month, the index gained 22.07% and 90.25% for the third quarter.

Turnover was at ZWG4.85 million after almost 1.6 million shares exchanged hands. Foreigners were net sellers at ZWG1.14 million against purchases of ZWG1.08 million. Delta contributed the most to turnover at ZWG1.85 million and Ariston saw the most volume at 645 700. Trades amounted to 213 with Econet the most active at 44.

The Top Ten Index shed 0.14% to 262.35 as losses in FBC, EcoCash and Meikles offset the gain in CBZ.
CBZ rose 7.75% to 1 400.75c.

FBC was the day’s worst performer with a 13.04% loss to 1 100c and EcoCash traded 6.49% weaker at 30.83c. Meikles, which is trading under caution pending the sale of some of its assets including its management contract partnership in the iconic Vic Falls Hotel, was 5.88% lower at 550c.

The Medium Cap Index lost 1.22% to 191.84. Dairibord dropped 3.32% to 261.03c despite an improved interim financial performance and FMP was down 2.45% to 64.99c.

Nampak led the risers with a 14.99% gain to 97c and RTG put on 10.42% to 53c in the wake of its interims where the group reported a 116% increase in revenue to US$18 million. Ariston added 7.99% taking its market cap to US$2.61 million and Zimre Holdings was 6.44% ahead to 33.05c.

On the VFEX, the All Share Index was 1.62% higher to 105.63 albeit in poor turnover of US$41 067.13.
First Capital led the risers with an 11.06% gain to 5.02 US cents and African Sun, which is trading under cautionary statement pending the disposal of its assets which include Monomotapa hotel, rose 8.63% to 4.28 US cents.

Innscor put on 2.45% to 45.98 US cents after the group reported a buoyant F24 performance mainly attributed to good volume growth across all categories. Zimplow, which reported a loss in its June interims, was 1.36% higher to 1.49 US cents.

Marginal losses were seen in Axia and Simbisa.-finx