PPC South Africa and Botswana cement sales decreased by 4%

In the current period, cement sales volumes in South Africa and Botswana decreased by 4% compared to the comparable period. The decline for the first half of the year was 5%. Sales volumes in the coastal region experienced a sharper decline than in the inland region, mainly due to a weaker retail market and a lack of infrastructure projects in the area.

Price increases implemented in July 2023 and January 2024 offset the decline in volumes with the South Africa and Botswana cement business increasing revenue by 6% in the current period compared to 5% at the half-year.

EBITDA margins increased marginally from 10,7% to 11.4% when comparing the current period to the comparable period but are below the 12.6% reported at the half year. The performance in the South Africa and Botswana cement market has deteriorated since the end of the current period.

PPC OUTLOOK

The short-term outlook for the South African and Botswana markets remains subdued. The short-term outlook for PPC Zimbabwe remains positive.

The reorganised and strengthened executive committee (Exco) team announced on 18 January 2024 now has the right blend of global and local cement industry experience, institutional and technical knowledge and a renewed energy to drive the needed improvements at PPC’s operational level. The Exco is conducting a comprehensive review to ensure that PPC is agile, well-managed and resilient in a challenging South African macroeconomic context. The key focus areas include:

• the optimisation of structure, processes and controls;
• the refocusing of the business on contribution margin through an assessment of the South African businesses commercial footprint; and
• the reduction in fixed operational and overhead costs.

The above will require improvements to the internal management reporting systems to better support its commercial and operational decision making. The board has targeted achieving a sustainable return on capital for its South African and Botswana business in the medium-term.

PPC intends to increase engagement with regulators and other key market stakeholders as a commitment to developing a sustainable cement industry in South Africa through creating a level playing field among local, regional and international competitors on key issues such as imported cement and low quality standard products.

With the South African gross debt to EBITDA ratio expected to be well below the stated optimal level, PPC intends to continue to return cash to shareholders through dividends or the implementation of a share repurchase program in the absence of any value enhancing corporate activity.