PPC has announced that its capital expenditure fell behind targets for the period ending March 2024. This was due to a delay in the company’s fly ash project in Zimbabwe, which was announced last November. Delays in accessing the power plant, which halted the design and commercial contract, were also a key factor.
PPC stated that, “Capital expenditure for the group remains behind the guidance of ZAR600m [US$32.2m] for the full financial year mainly due to the delay of the fly ash project (expansion capex) in Zimbabwe.
“This is a timing issue due to a delay in accessing the power plant to complete the plant design and commercial contract.
“This is now expected to commence early in FY25 as opposed to FY24 thereby delaying the benefits of this expansion project for approximately one year.”
The company also announced that its free cash flow for South Africa and Botswana reached ZAR364m, increasing 50.4 per cent from ZAR242m in the previous period.
The share repurchase programme reached the approved level of ZAR200m during the first half of March 2024.
PPC said, “Following the receipt of the proceeds from the disposal of CIMERWA (Rwanda operation), South Africa and Botswana turned cash positive during the current period and at January 31, 2024, were in a net cash position of ZAR280m.” This comes after PPC announced the offloading of its 51 per cent stake in CIMERWA.
Zimbabwe operations
“Zimbabwe continues to remain debt-free and held ZAR95m in unencumbered cash at January 31, 2024. The group’s targeted gross leverage of 1.3-1.5 times the South African and Botswana operations EBITDA (including dividends from Zimbabwe) remains unchanged,” the group said.
During the same period, the group’s volumes of growth at its Zimbabwean operation rose by 41 per cent due to housing and government-funded infrastructure projects. The cement producer has said that the government has prioritised infrastructure development, as it sees it as a key economic indicator.
Planned infrastructure projects include the Lake Gwayi-Shangani dam and the rehabilitation of the Harare-Beitbridge Highway.
Since coming to power in 2017, the Second Republic has made residential and infrastructure development a priority as outlined in the National Development Strategy 1 (NDS 1). This plan aims to get the country to upper middle-income economy status by 2030.
PPC said, “Cement volumes continued to show strong growth, increasing 41 percent in the current period, albeit slightly lower than the half-year growth of 44 percent due to the impact of the stronger base in the comparable period.
“Growth continues to be strong as a result of both residential construction and government-funded infrastructure projects, constrained imports and a low base in the comparable period due to the extended shutdown.”
Over the 10-month review period, the group’s revenue rose 27.6 per cent, compared to revenues in the same period of 2023. The group explained, “This was driven mainly by continued strong growth in PPC’s Zimbabwe operations relative to the low base in the comparable period.”
In July and November of 2023, PPC Zimbabwe reported dividends of US$4m and US$7m respectively. Next year’s dividend declaration is expected this July.
