PPC's group revenue impacted by Zimbabwe

PPC announced a group revenue of ZAR4.9bn (US$330.1m) and group EBITDA of ZAR868m for the six months ended 30 September 2019. Group revenue was down 12 per cent on results from the six-month period at ZAR5.6bn, which was attributed to a 17 per cent volume decline in group cement volumes.

Group EBITDA was also affected by Zimbabwe's currency devaluation and hyperinflation as well as the trading environment in South Africa, plus a one-off restructuring costs of ZAR83m. When excluding PPC Zimbabwe, group revenue was marginally down by one per cent.

“The positive operational results in Rwanda and the DR Congo partially offset difficult markets and competitive conditions in South Africa and Zimbabwe,” said Ronald van Wijnen, PPC's CEO.

The Cimerwa subsidiary in Rwanda achieved a 28 per cent revenue growth to ZAR514m during the period. In addition, it reported a 70 per cent increase in EBITDA to ZAR156m due to a 20 per cent pick-up in volume and improved cost per tonne of cement. In the DR Congo, PPC Barnet DRC increased its revenue by 26 per cent to ZAR303m. EBITDA in DR Congo expanded by 30 per cent to ZAR81m as strident cost controls and the habit of route to market strategies in an oversupplied market were implemented.

Zimbabwe was affected by power outages and a weaker cement market, and saw a 54 per cent drop in revenue to ZAR497m. EBITDA declined 43 per cent to ZAR201m, although EBITDA margins improved from 32 to 40 per cent.

Southern African revenue including Botswana had an 8-10 per cent rise in average selling prices, but PPC cement volumes declined by 15 to 20 per cent, with bigger drops in coastal areas. Domestic performance was also impacted by a five per cent increase in imports and higher blender activity, reports PPC. Overall revenue from Cement Southern Africa fell by eight per cent to ZAR2.55bn.

Aggregates, ready-mix and lime divisions of the group had profitability impacted by competitive markets, higher fuel, maintenance and other input costs.

Rowel Van Dijk, PPC’s interim CFO, said: “We also managed other costs carefully during the period with Group overheads, excluding the one-off restructuring costs, decreasing by 19 per cent. This was a key driver in achieving ZAR65/t towards our ZAR70/t savings target fro PPC South Africa.”