PPC Zim volumes down 16% despite robust cement demand
Volumes year-on-year were down 16% despite robust cement demand from concrete product manufacturers and government-funded infrastructure projects. This is due to the impact of the planned kiln shut down for maintenance which took place in the first half of the year, which negatively impacted the performance. In addition, plant stoppages due to power interruptions negatively affected performance in the second half. PPC Zimbabwe has gradually recovered market share lost over this period and is well positioned to deliver strong volume growth going forward.
Revenue decreased by 19%, but PPC Zimbabwe was able to implement US$ price increases to cover input cost inflation and enhance margins. EBITDA declined by 7% to R365 million (March 2022: R393 million).
PPC Zimbabwe is debt-free and had unrestricted cash holdings at 31 March 2023 of R118 million. PPC received US$8.8 million in dividends during the year, compared to US$6.2 million in the prior year. In rand terms, PPC received R147 million in the current year net of withholding taxes compared to R91 million in the prior period.
CIMERWA (Rwanda)
CIMERWA’s volumes increased by 1% for the current period, in line with expectations given the planned kiln shut down for maintenance in the second half. Revenue increased by 29% assisted in part by the 9% depreciation of the rand and strong price increases to offset cost inflation. EBITDA increased by 31% to R447 million (31 March 2022: R341 million).
CIMERWA gross debt declined to R265 million (31 March 2022: R383 million). Cash declined from R221 million at 31 March 2022 to R160 million at 31 March 2023, due to the maiden dividend paid in March 2023 of R172 million. The dividend received by the SA obligor group, net of withholding taxes, amounted to R79 million.
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.
