PPC - July 2019
For the year ending 31 March 2019, PPC has reported a one per cent YoY increase in group revenue to ZAR10.4bn (US$731.16m), supported by a one per cent uptick on overall cement volumes to 5.9Mt. Group overheads over the period fell by 19 per cent YoY, leading to a cost reduction of ZAR260m. As a result, group EBITDA advanced by four per cent to ZAR1.9bn with an EBITDA margin of 18.7 per cent. The Democratic Republic of Congo (DRC) business was accounted for in the period for the first time and made a positive contribution to EBITDA of ZAR108m.
South Africa
In South Africa, including Botswana, cement volumes declined by 2-3 per cent YoY due to a challenging market. Cement imports into the country were up by 84 per cent YoY to 1Mt during 2018, putting pressure on coastal areas, while a continued increase in the production of blended cement led to a more competitive market inland. Overall revenue for PPC’s cement business in southern Africa came in at ZAR5431m, down one per cent YoY. Cost of sales over the same period increased by six per cent, mainly due to a 10 per cent advance in distribution costs per tonne. This combination of lower revenue growth and higher costs resulted in a 20 per cent YoY contraction in EBITDA to ZAR957m, with margins declining from 21.8 to 17.6 per cent over the 12-month period.
Rest of Africa
Revenue from cement in the rest of Africa increased by two per cent YoY to ZAR2826m. Volumes advanced by 10 per cent on the back of the ramp up in the DRC and a positive contribution from Rwanda. The difficult trading conditions in Zimbabwe, however, had an adverse impact on overall volume growth and pricing. EBITDA expanded by 10 per cent to ZAR810m with the EBITDA margin improving from 26.7 to 28.7 per cent.
Looking ahead, PPC expects the operating environment in South Africa to remain challenging, given the weak demand and competitive pressures. In Zimbabwe the company will continue to focus on cash preservation, self-sufficiency and optimising operations. In the Rwanda market, CIMERWA is expected to capitalise on the investment to expand capacity, with an anticipated growth in output. Meanwhile, the ramp-up in the DRC continues, with a focus on maximising EBITDA.
