PPC volumes down 5 percent

Business Reporter—

REGIONAL cement manufacturer Pretoria Portland Cement Zimbabwe volumes for the half year to September 2016 fell 5 percent compared to the same period in the prior year on subdued economic activity and downward price review.In a statement accompanying the group’s results, PPC indicated local pricing of cement was down 10 percent compared to same period last year.

Official retail prices of cement range from $160 to $240 a tonne.

However, operational efficiencies helped in stabilising margins, according to the group’s chief executive Mr Darryll Castle.

PPC Zimbabwe recently commissioned an $82 million mill that is expected to drive volumes and margins.

“The new mill will improve margins by 3 percent to 5 percent,” said Mr Castle.

The new milling plant’s official testing began in October 2016 and has already sold its first 1 000 pallets of bagged cement.

According to Mr Castle, the cement maker utilised own cash resources which reduced the project debt to $20 million instead of $75 million initially communicated.

Management at PPC further anticipates the local unit’s first debt repayment in December will be made in country to deal with liquidity constraints.

PPC Zimbabwe is a subsidiary of South Africa’s PPC Limited. The group changed its year end to March from September and therefore performance is also compared to last reported period, which is the six months to March 2016.

In line with this, PPC said volume performance for the period under review improved compared to the six months to March 2016 due to seasonality effects, although pricing remained subdued.

Other regional operations, that is Botswana and Rwanda, recorded mixed performances. In Botswana, volumes were down 2 percent on a 12 percent price decline and stiff competition.

On the other hand, cement volumes in Rwanda surged 150 percent on improved efficiency and production from its new plant that became operational in September last year. The plant has a 600 000 tonnes per annum capacity.

Overall, the group reported a 66 percent decline in earnings on high finance costs which rose 54 percent to R509 million from R330 million. Revenue for the period rose 15 percent to R5,2 billion compared to R4,6 billion achieved in the six months to March 2016 on higher group cement sales volumes especially in South Africa.

Volumes in South Africa were 13 percent up and 19 percent higher in Rwanda compared to the six months to March 2016.

By close of trade yesterday, PPC was 3,36 percent above previous day session to settle at 50 cents.