PPC CEMENT SALES IN ZIMBABWE DOWN 25%

Regional cement maker PPC says its overall cement
sales volumes in Zimbabwe contracted by between 25% and 30% for the four months
ended July 30, 2019 due to a weaker economic climate.

Zimbabwe
is currently experiencing a harsh economic environment, characterised by fuel
and electricity shortages as well as liquidity constraints coupled with
inflationary pressures.

In its
operational update for the four months ended July 30, 2019, PPC said its
operations in the southern African nation were constrained.

“Trading
conditions in Zimbabwe remain challenging, due to liquidity constraints and
inflationary pressures. PPC remains focused on optimising its local operations
and implementing its cash preservation strategy to ensure the business is
self-sufficient,” the group said.

PPC said
the devaluation of the real time gross settlement (RTGS) dollar versus the
United States dollar impacted revenue, which declined by between 30% and 35% in
rand.

“Overall
cement sales volumes contracted by between 25% to 30% due to a weaker economic
climate. Cement pricing, which was aligned with input cost inflation, was
higher than the previous comparable period,” PPC said.

It said
earnings before interest, taxes, depreciation, and amortisation (EBITDA)
declined by between 10% to 15%, while EBITDA margins remained within the guided
range of 30% to 35%.

In the
period under review, the group’s EBITDA increased by between 5% to 10% on the
back of a continued selling price momentum in South Africa and ongoing cost
optimisation in terms of R70 per tonne savings initiative.

The group
incurred once-off restructuring costs as part of its operational and head
office optimisation, which detracted from the EBITDA performance.

“The
restructuring of the group will position the business to take advantage of
future growth. The southern Africa cement business continues to optimise its
route to market strategy by focusing on its most profitable market segments,”
it said.

In the
rest of Africa, the group said the focus was on cash preservation and
maximising US$ EBITDA per tonne.

The
group’s balance sheet remains strong, with group gross debt at similar levels
to those reported for March 2019.

Despite a
challenging operating environment, PPC said average cement prices in southern
Africa (including Botswana), increased by 7 to 8% for the period.

Aligned
with the objective of focusing on EBITDA enhancing volume growth, cement sales
declined by 10 to 15% compared to the corresponding period in comparable
period, in line with the estimated decline in domestic demand.

“Domestic
cement demand remains constrained due to a subdued demand environment. Importer
and blender activity have also contributed to a competitive operating
environment,” PPC noted.

Total cement imports increased by 22% for January 2019 to June 2019 compared to the same period in 2018, amounting to 640 000 tonnes.https://www.newsday.co.zw/2019/09/ppc-cement-sales-down-25/