Robust Zim, SA sales boost PPC’s earnings

But this trend was tempered by weakness in cement sales in Botswana, labour problems at Eskom’s new Medupi power station, cheaper imports from Pakistan and lower demand in the group’s lime and aggregates divisions.

PPC’s share price dropped 5,44 percent to close at 32,85 rands last Thursday.
Revenue fell 16 percent in the lime division as a result of a 20 percent decline in sales volumes.

This came after a fire-halted production at ArcelorMittal SA’s largest steel plant in Vanderbijlpark for two months. PPC’s earnings per share ended 21 percent lower at 62 cents from 78 cents per share last year.

“PPC sells metallurgical grade lime mainly to the steel and alloy industries,” Ross Heyns, equity analyst at Kagiso Asset Management, said last Thursday.
“As a result, the fire at Vanderbijlpark and the generally depressed condition of the local steel industry affected the lime division’s sales volumes and profitability,” he said.

South African cement sales volumes increased 6 percent and average selling prices were up by 4 percent, with volume growth coming from both inland markets and the Western Cape.

This mainly came as a result of private sector investment in residential and commercial space, new CEO Ketso Gordhan said.
“And a sprinkling of (state-funded) infrastructure work that is emerging,” he said.

“Net profits were down 20 percent because of IFRS 2 (international financial reporting standards) charges and Zimbabwe’s indigenisation charges.” PPC said when IFRS 2 relating to local economic empowerment charges and Zimbabwe’ indigenisation costs were excluded, normalised earnings rose to 83 cents per share.

While the group resolved technical issues at its Dwaalboom plant in Limpopo, costs of sales of 2,6 billion rands were 9 percent higher due to electricity and depreciation costs.
However, cash generated from operations rose to about 1 billion rands from 889 million rands, with normalised earnings per share rising 4 percent.

Cement sales volumes rose 6 percent, mainly due to growth in Zimbabwe and better cement volumes.
This helped group revenue rise 8 percent to 3,8 billion rands, along with improved cement pricing and the favourable devaluation of the rand against the dollar and Botswana pula.

Bloomberg has reported PPC plans a US$200 million plant in the Democratic Republic of Congo. — Businessday.