PPC’s loss widens as volumes in SA and Zim come under pressure
SA’s biggest cement maker PPC said on Monday its full-year loss widened in its year to end-March, hit by volume declines in its key markets of SA and Zimbabwe.
Revenue, excluding dividends, increased 1% to R6.58 billion, with the company reporting a loss of R574 million, from R77 million previously.
The company was hit by R195 million in non-cash items, primarily relating to hyperinflationary accounting. Consumer inflation in Zimbabwe trended at triple digits for much of the year and reached 244% in December, according to the World Bank.
PPC’s SA and Botswana cement business, which accounts for more than half of group revenue, also saw volume declines of 5.8%, with the company saying volumes in the coastal region was offset by continued weak trading conditions in the inland region.
The coastal region saw an increase in cement volumes due to increased industrial construction activity and specific government projects as well as improved retail sales. Cement imports into the Western Cape remained low during the period due to global supply chain constraints and a weaker rand.
There was a decline in demand in the larger inland region in both the retail and the construction segments, with the construction sector being supported to some extent by the building of distribution centres and housing estates.
The company also felt pressure in Zimbabwe, where volumes fell 16 percent, amid a slower than anticipated recovery after a planned kiln shutdown. Despite the inflationary pressures, PPC said the Zimbabwean market remained sound, with strong demand from concrete product manufacturers and government-funded infrastructure projects. Government reduced the number of import licences in January 2023, which will support the recovery of PPC’s market share, it said.
PPC CEO Roland van Wijnen said in the results that despite the challenging times, the group was pleased with a reduction in its debt and its strong financial position, which would allow it to “weather the local economic cycle.”
“Increased demand through an enhanced infrastructure programme and a stronger economic climate is required to enable us to more effectively utilise the capacity available in our primary market.”
“We therefore remain hopeful that the South African government will roll out its infrastructure development plans and protect the local cement market through the introduction of blanket import tariffs.”
PPC said on Monday that gross debt declined almost R400 million to about R1.19 billion, while finance costs fell more than a quarter.
A distribution in the form of a share repurchase of up to R200 million was approved by the board, PPC said on Monday. This is equivalent to about 5 percent of its current market value.
PPC’s shares were up more than 1 percent in early trade on Monday morning, having risen almost 23% so far this year, but having fallen about 12 percent in the past twelve months.-ebusinesseekly
