Zimbabwe Stock Exchange-listed Pretoria Portland Cement (PPC)’s domestic sales improved by more than 50% during the year ended September due to a combination of increased demand and operational problems suffered by competitors.
Group cement sales declined 3% following lower sales in coastal areas and Botswana plus lower exports, but were partly offset by growing demand in Zimbabwe.
“Operating performance at the Colleen Bawn factory improved during the second half of the year and equipment at our Bulawayo grinding depot that had been mothballed for 15 years was re-commissioned to meet increased demand,” PPC said in its audited preliminary report for the year ended September 30 2011.
“Significant input price inflation on key items such as electricity continues to be a concern for our Zimbabwean operations.”
Earnings per share at R164,4 cents declined by 22% (2010: 211,1 cents per share).
“The results reflect the difficult conditions experienced by local building and construction industries.
Demand in South Africa and Botswana has only recently begun to improve and the only region where we enjoyed growth during the year was Zimbabwe,” said PPC CEO Paul Stuiver.
“Although results are down, they have been improving since the first half of the year and we maintained good cash generation and respectable margins. We also managed to reduce overhead costs whilst delivering on a number of strategic projects.”
PPC’s South African cement volumes were 4% lower due to our exposure to lower demand in the Western and Eastern Cape provinces.
It said over-capacity in the South African cement industry continued to drive competitive market dynamics and pressure on cement selling prices.
PPC said through ongoing research and development, it was able to launch an enhanced cement product range offering greater value to customers across all strength categories adding there were plans to release some of them to Zimbabwe in the near future.
Demand in Botswana weakened during the second half of the year mainly as a result of a slow-down in government spending on infrastructure projects.
Exports to neighbouring countries decreased by 35% mainly as a result of the strong South African rand that prevailed throughout most of the financial year.
“We expect cement demand in Zimbabwe to continue growing unless conditions deteriorate. The outlook for the lime division will continue to depend mainly on demand from local steel and alloys industries,” said PPC.