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Oliver Kazunga, Senior Business Reporter
PRETORIA Portland Cement (PPC) Zimbabwe says it remains optimistic of benefiting from local infrastructure projects as it is well capitalised and positioned to weather the prevailing negative economic conditions.
The country has been experiencing economic challenges that have resulted in depressed activity in the construction sector weighing down on demand for construction material.
In a trading update to shareholders last week, the Zimbabwe Stock Exchange-listed local unit, PPC Zimbabwe assured investors that the business was self-sufficient and is preserving cash by investing in inventory and accelerating capital expenditure.
“In Zimbabwe, the business is self-sufficient and will continue to focus on delivering to the market at stable EBITDA (earnings before interest, tax, depreciation and amortisation) margins while managing cash and implementing strategies to preserve the longer-term value of the business.
“Despite the challenging trading conditions, the business remains well capitalised and is well positioned to benefit from local infrastructure projects and growth in the region,” it said.
During the period ended July 30, 2019, PPC Zimbabwe sales declined by between 30 and 35 percent due to the prevailing challenging economic climate that has seen many building projects shelved.
“Volumes declined by 30 to 35 percent, in-line with the decrease in the overall market, whilst cement pricing was adjusted on a weekly basis to contend with the rapid increase in inflation and the devaluation in currency.
“Revenue declined by 54 percent to R497 million (Sept 2018: R1 076 million) against the backdrop of a hyper-inflationary environment, severe weakening of the ZWL, regular power outages and a weaker cement market.”
In 2016, PPC Zimbabwe commissioned a US$82 million plant in Harare which has been supplying the northern markets and catering for exports to countries such as Zambia and Malawi.
It said in the outlook, the cement producer will continue to focus on stabilising the performance of its core operations and positioning the group for future growth.
In Southern Africa there are further opportunities to optimise the delivery network and related fixed and variable costs. — @okazunga.
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