Chronicle Editor
Sikhulekelani Moyo, [email protected]
PORTLAND Pretoria Cement (PPC) Limited has reported a 27,6 percent increase in group revenue for the 10 months ending January 31, driven by growing demand for cement in the country due to Government infrastructure development projects and private residential construction.
PPC Zimbabwe recorded a 41 percent increase in cement volumes during the same period and declared dividends of US$4 million and US$7 million in July and November 2023 respectively.
The next dividend declaration is expected in July.
The cement firm said the short-term outlook remains positive, driven by residential construction, Government-funded infrastructure projects, constrained imports and a low base in the comparable period due to extended shutdowns.
However, EBITDA margins were lower than the half-year due to the high cost of clinker imports.
“EBITDA margins were 22 percent in the current period, an improvement from 18 percent in the comparable period, but lower than 25 percent at the half-year. This was mainly due to the high cost of clinker imports as local production could not meet demand levels,” the company said.
It said group revenue was driven by continued strong growth in PPC’s Zimbabwe operations relative to the low base in the comparable period.
“This is higher than the 22,1 percent revenue growth to the end of September 2023 compared to the six months ended 30 September 2022 calculated on a consistent basis to exclude CIMERWA.”
Revenue growth in the South African and Botswana cement business continued to be driven by price increases, positively offsetting the declining sales volumes as experienced in the half-year.
Group EBITDA margins improved to 13,6 percent in the current period from 9,9 percent in the comparable period.
Capital expenditure remains behind the guidance of R600 million 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 South African and Botswana free cash flow, being net cash inflow before financing activities and excluding dividends from Zimbabwe, increased to R364 million in the current period from R242 million in the comparable period. The share repurchase programme reached the R200 million approved level during the first-half of March 2024.”
Following receipt of the proceeds from the disposal of CIMERWA, South Africa and Botswana turned cash positive during the current period and at January 31 were in a net cash position of R280 million.
Zimbabwe continues to remain debt free and held R95 million in unencumbered cash at January 31.
According to the Ministry of Industry and Commerce, the cement sector was one of the most vibrant last year because of the commendable results it recorded.
The sector made a giant leap in its quest to modernise and industrialise, in job creation and several transformative projects that were completed and commissioned.
Some of the notable strides made by local cement manufacturers include retooling, which is one major aspect of industrialisation that is in line with National Development Strategy 1. — @SikhulekelaniM1
Online Reporter