Cement in South Africa and Botswana in line with the prior year
Cement sales volumes in the region for the 12 months ended 31 March 2022 were in line with the prior year as demand normalised from a high base. Relative to the 12 months ended 31 March 2020 (pre-COVID-19), cement sales volumes increased by 5% to 9%. South Africa and Botswana cement sales continue to benefit from demand growth in the informal and rural markets, albeit at a “normalised” rate following the post-COVID-19 lockdown spike in demand. Cement sales volumes in the inland region also benefited from pockets of demand from industrial construction and mining activity.
As a result, inland region cement sales volumes exceeded pre-COVID-19 levels. Cement sales volumes in the coastal region experienced low single-digit year-on-year demand growth due to a partial recovery in industrial construction demand. However, despite the improvement in demand, cement sales in the region are still below pre-COVID-19 levels.
PPC is well-positioned to benefit from a potential boost in cement demand once the government’s infrastructure programme gathers momentum. However, PPC has yet to experience any meaningful uplift in cement sales from this programme except for limited road construction and rehabilitation activity. The group can immediately make additional capacity available to capture any upswing in demand.
Cement and clinker imports, mainly from Vietnam, increased by 19% year-on-year and currently exceeds pre-COVID-19 levels.
PPC estimates that imports account for approximately 10% of RSA cement sales. PPC and the industry continue to engage with the relevant authorities for relief against unfair competition from imports, which threatens the financial sustainability of a vital component of the manufacturing and construction sector and erodes the industry’s ability to maintain jobs. PPC is committed to working with all parties within the parameters of the prevailing competition laws to achieve an expeditious outcome.
PPC implemented average price increases of 4% to 7% year-on-year, which partially offset input cost inflation. However, realised selling prices increased by 5% year-on-year due to a change in product mix and a depreciation of the Botswana pula against the South African rand.
For the 12 months ended 31 March 2022, South Africa and Botswana cement revenue increased by 4% to R5 415 million (March 2021: R5 196 million). Relative to the comparable period in 2020, revenue increased by 12%. EBITDA reduced by 5% to R825 million (March 2021: R866 million) with a margin of 15,2% (March 2021: 16,7%). Both EBITDA and EBITDA margin were impacted by higher input cost inflation and weaker volumes in the second half of FY22 due to a more normalised demand and higher than usual rainfall. Relative to March 2020, EBITDA increased by 34,6% and EBITDA margins increased by 2,6%.
