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Business Reporter
SOUTH African cement maker PPC Limited says the strong performance by its local unit, PPC Zimbabwe, will result in a 20 percent increase in earnings for the year to March 31, 2024.
PPC Zimbabwe, which is listed on the Zimbabwe Stock Exchange (ZSE), manufactures and markets cement and cement by-products for the local construction industry and the region.
The company continues to benefit from the various construction activities across the country, largely infrastructure funded by the Government, but also due to massive housing development by individuals.
In a trading update ahead of publishing its full-year financials, Johannesburg Stock Exchange-listed PPC Limited said it expects earnings per share (EPS) and headline earnings per share (HEPS) for the year to March 31, 2024 to differ by at least 20 percent from the prior year, primarily due to a strong performance by PPC Zimbabwe.
The company is finalising its results for the year and is required in terms of the JSE Limited listings requirements to issue a trading statement if there is a reasonable degree of certainty that earnings will differ by at least 20 percent from prior year financials.
“This difference is primarily due to the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period in which it had an extended kiln shutdown,” reads the trading statement.
For the review period, PPC Zimbabwe changed its functional currency from the Zimbabwean dollar to the US dollar, which had a positive impact given the elimination of net monetary losses of R131 million arising in the prior period due to hyperinflation accounting.
The group noted that due to the disposal by PPC of its 51 percent shareholding in CIMERWA in Rwanda on January 25, 2024, CIMERWA’s results for the period from April 1, 2023, to January 25, 2024, will be shown as discontinued operations.
“The prior-period comparative figures have accordingly been represented to exclude CIMERWA’s results and to disclose its results separately as discontinued operations,” reads the statement.
According to the group’s trading update for the 10 months to January 31, 2024, revenue increased by 27,6 percent compared to the 10 months ended January 31, driven mainly by continued strong growth in PPC’s Zimbabwe operations relative to the low base in the comparable period.
In the period, PPC Zimbabwe cement volumes continued to show strong growth, increasing by 41 percent, albeit slightly lower than the half-year growth of 44 percent due to the impact of the stronger base in the comparable period.
The group said 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.
Group earnings before interest, tax, depreciation and amortisation (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 group said.
PPC Zimbabwe declared dividends of US$4 million in July 2023 and US$7 million in November 2023.
Online Reporter