PPC Zimbabwe revenue declines by 20%

BY MTHANDAZO NYONI

PRETORIA Portland Cement (PPC) says revenue at its Zimbabwean entity declined by 20%, compared to last year, due to a weaker cement market, clinker shortages and depreciation in the functional currency in the second half of the financial year.

In its consolidated financial statements for the year-ended March 31, 2019, the regional cement maker said revenue declined by 20% to R1 447 million from the R1 813 million achieved in the same period last year.

“The successful implementation of our route-to-market strategy has enabled PPC to offset some of these headwinds, with volumes declining by 5%,” the company said.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) contracted by 20% to R461 million. Margins were, however, maintained at 32%.

“PPC Zimbabwe is operationally self-sufficient and continues to drive local procurement and exports to reduce forex requirements,” it said.

PPC said the published results for its local unit for the first half of the 2019 financial year were based on an exchange rate of 1RTGS$:1US$. On the other hand, the reported results of
PPC Zimbabwe being consolidated in PPC group from October 1, 2018 to March 2019, were based on the commercial exchange rate of 3,5RTGS$:1US$.

Despite the deteriorating economic environment and the challenges being faced with processing of foreign payments by the banks in Zimbabwe, the directors believe that PPC Zimbabwe has
the ability to continue in operation as a going concern for the foreseeable future.

“PPC Zimbabwe has set out action plans to help ensure that operations are not interrupted due to difficulties in remitting payments to foreign suppliers. Through the action plans, PPC
Zimbabwe is exploring various mitigation methods such as increasing export sales and obtaining a trade financing mechanism facility,” PPC said.
Group revenue was flat at R10 billion.

PPC said it would continue to service its debt obligations with in-country cash resources and legacy debt has been registered with the Reserve Bank of Zimbabwe and will be settled on a
1:1 basis.

“Management has implemented contingency measures to mitigate the impact of the liquidity challenges,” the group said.
In its outlook, PPC said the Zimbabwe unit would continue to focus on cash preservation, self-sufficiency and optimising operations.

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