Source: PPC Zim trading beyond forecasts | Herald (Business)
Business Reporter
Pretoria Portland Cement (PPC) says its local unit PPC Zimbabwe continues to trade ahead of expectations driven by growth in sales supported by strong demand from the Government infrastructure projects and retail sales.
Experts have often described infrastructure projects as a panacea to Zimbabwe’s economic growth and development.
Therefore, under the National Development Strategy 1 (NDS1), the Government committed to infrastructure development, supported by the private sector. The NDS1 is the Government’s current five-year economic management master plan through to year 2025, which has a strong focus on building, expanding and restoring infrastructure. PPC said in its annual financial statements for year ended March 31, 2022 is positioned to benefit from growth as the company also boasts of a solid financial position.
“PPC Zimbabwe continues to trade ahead of expectations even though trading conditions remain challenging due to the macro-economic environment.
For the 12 months ended March 2022, cement sales volumes increased by 28 percent year-on-year due to retail demand and support from the Government-funded projects. Relative to the 12 months ended 31 March 2020, the pre-COVID-19 era, volumes increased by 41 percent,” it said.
During the period under review, revenue increased by 34 percent to R2 172 million as a result of increased cement sales volumes compared to the 12 months ended March 2020 whereby revenue increased by 17 percent.
The company said that it adjusted selling prices in local currency and US dollars to reflect currency depreciation and input cost inflation respectively. It said that earnings before interest, tax, depreciation and amortisation (EBITDA) for the 12 months period declined by 18,3 percent to R393 million compared to (March 2021’s R481 million with a reduced EBITDA margin of 18,1 percent.
“PPC Zimbabwe incurred additional costs in importing clinker to support volume growth and offset the impact of a planned and unplanned kiln shutdown during the period,” it said.
It added that the importation of clinker, higher maintenance costs and the depreciation of the Zimbabwe dollar against the rand negatively impacted EBITDA.
During the period under review, the company said the Reserve Bank of Zimbabwe (RBZ) fully honoured its obligation to settle PPC Zimbabwe’s legacy debt. It said that the debt was fully repaid during December 2021 and PPC Zimbabwe is financially self-sufficient and is focused on cash preservation and maximising US$ EBITDA. Meanwhile PPC Zimbabwe paid US$6,2 million in dividends during the financial year, in addition to US$4,4 million in June 2022.
At group level, revenue for the 12 months ended 31 March 2022 increased by 11 percent to R9 882.