PPC: SA market remains muted and competition remains high
The coastal region of the cement business continued to see relatively better demand for cement compared to the inland region and benefited from muted imports given the weaker rand over this period. However, trading conditions in the inland region remained difficult, resulting in overall cement volumes reducing by 5.8% compared to the year ended 31 March 2022 (“the prior period”). Positively, during the current period, PPC was able to continue to increase its selling prices on a bi-annual basis and achieved an average selling price increase of 8.0%.
The SA obligor group operationally comprises the South African and Botswana cement and materials businesses. PPC South Africa and Botswana cement revenue increased by 1.7% during the current period. High input cost inflation remained a key feature requiring rigorous cost mitigation measures to cushion the impact of these high input costs. Overall, total costs increased by 4% compared to the prior period.
Outlook
PPC will continue to focus its resources on Southern Africa, which includes Zimbabwe, while preserving its sound market position in Rwanda. Further operational efficiencies and cost containment measures have been identified to mitigate rising input costs as the economic climate in its key South African market remains muted and competition remains high across the portfolio. PPC will continue to implement bi-annual price increases to achieve margin recovery. Without a significant increase in infrastructure spending and economic growth, South Africa’s cement demand is expected to remain subdued. PPC South Africa is well positioned to benefit from an increase in cement demand with additional capacity readily available to capture an upswing in demand without additional capital expenditure required. PPC Zimbabwe anticipates a continued recovery and the outlook for CIMERWA remains positive.
