PPC sees group revenue decline 2% YoY

South Africa-based PPC has seen its group revenue decline two per cent YoY to ZAR10.241bn (US$618.23m) in the year ending 31 March 2020, compared with ZAR10.494bn in the previous year. Excluding Zimbabwe, revenue fell seven per cent from ZAR9.047bn to ZAR8.380bn, mainly due to a decline in revenues from South Africa cement.

Furthermore, the company posted a loss of ZAR2.39bn in the FY19-20 against a ZAR162m profit in the year-ago period.

Cost of sales declined three per cent YoY to ZAR8.248bn. Administration and other operating expenditure increased 16 per cent to ZAR1.284bn, reflecting the impact of hyperinflation in Zimbabwe and an increase in fees paid to consultants.

In September PPC delayed the release of its financial report for a third time as it dealt with accounting errors and a refinancing process.

"FY20 was characterised by difficult trading conditions, especially in South Africa. The global COVID-19 pandemic, which emerged during the last month of the financial year, further exacerbated an already difficult trading cycle. We acted swiftly to implement protocols to protect our employees, improve our competitiveness and preserve cash. While we have seen a decline in our financial performance, we also see that the actions we have taken to reposition PPC to deliver sustainable value for all our stakeholders are beginning to yield results," said Roland van Wijnen, CEO.

The company’s South African cement segment, which includes Botswana, saw realised average selling prices rise by 8-10 per cent, as the business continued its drive to increase cement prices to recover operational costs and improve returns. However, cement volumes declined 15-20 per cent, with the coastal regions experiencing a smaller decline. PPC estimates that the South African cement industry declined by 7-10 per cent in the FY19-20, according to its report.

The construction sector, which accounts for a substantial proportion of its sales, was weaker than the overall market. Imports and blender activity further exacerbated the competitive environment, with cement imports increasing by 36 per cent YoY to 1.3Mt in the FY19-20.

The segment’s revenue in South Africa and Botswana declined by 11 per cent to ZAR4.843bn from ZAR5.431bn in the FY18-19. The reduction in revenue, coupled with a reduced ability to absorb fixed costs from the decline in volumes, resulted in EBITDA contracting by 36 per cent to ZAR613m from ZAR957m in the previous fiscal year.