PPC reports on South Africa, Botswana and Zimbabwe Cement
Cement sales volumes in SA and Botswana were down 5,8% when compared to the prior year (FY23: negative 4,6%), reflecting lower volumes across our key markets in South Africa while Botswana’s volumes were flat. Competition remains stronger in the inland region where sales volumes have reduced especially since January 2024. Coastal volumes have dropped at a higher rate than inland due to demand.
While the construction sector in the coastal region continues to be depressed, the main driver of the volume decreases in this region was in the retail sector, impacted by low demand and aggressive price competition, especially in the last quarter of the financial year.
Clinker sales from inland to Zimbabwe have more than doubled in the current year supplementing the revenue increase in SA and Botswana cement business.
PPC continued to increase its cement selling prices on a bi-annual basis and achieved an average selling price increase of 9,7% when compared to the prior year (FY23: 8,0%). Clinker sales, however, was the main driver of the SA and Botswana cement revenue increase of 5,2% to R6 080 million (FY23: R5 782 million) given the 5,8% decline in cement volumes.
EBITDA increased 1,5% to R684 million (FY23: R674 million) with a margin of 11,3% (FY23: 11,7%) as price increases were not sufficient to offset cost increases. Key turnaround initiatives are to focus on contribution margin per customer, operational efficiencies to contain variable costs and absolute fixed costs/administration costs reduction.
ZIMBABWE
PPC’s operation in Zimbabwe delivered a strong recovery in the current year albeit off a low base following the extended maintenance shutdown of the kiln in the first half of the prior year. Zimbabwe won back the market share it had lost with demand across both residential construction and government funded infrastructure projects.
Cement sales volumes increased 36,6% when compared to the prior year (FY23: down 15,8%) although growth has softened as the effect of the stronger base in the H2 FY23 starts coming through.
Revenue for the year increased by 90,9% in rand terms to R3 346 million (FY23: R1 753 million) on strong cement volumes and price increases. The full year impact of the 5% selling price increase that was effected in August 2022 (prior year) and the 4% sales price increase effected in January 2024 also contributed to the revenue increase. EBITDA margins reduced
marginally to 20,2% (FY23: 20,8%) for the full year, but significantly off the half year margins of 24,6% due to high electricity costs resulting from a gradual tariff increase of ~76% from October 2023. Clinker purchases also continued in H2 FY24 and the full cost of purchased clinker was 169% higher than the prior year.
