REGIONAL cement maker PPC says its overall sales volumes in Zimbabwe for the period April 2019 to February 2020 contracted by between 15% to 20% due to a weak economic climate.
BY MTHANDAZO NYONI
Zimbabwe is currently experiencing a deepening economic crisis characterised by fuel and electricity shortages as well as liquidity constraints coupled with inflationary pressures.
In its operational update for the period April 2019 to February 2020, the cement maker said despite the challenging trading conditions in Zimbabwe, including liquidity constraints and inflationary pressures, the local entity remained self-sufficient.
“Overall cement sales volumes have declined by 15% to 20% due to a weaker economic climate, offset by cement pricing which has been aligned to input cost inflation. PPC Zimbabwe achieved earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins of 35% to 38%. PPC Zimbabwe has continued to meet its debt obligations in country,” PPC said.
The cement maker operates a clinker plant in Gwanda (Colleen Bawn) in the southern part of the country, as well as a cement milling plant outside Bulawayo and another one in Harare.
Apart from South Africa and Zimbabwe, PPC also has units in Botswana, Ethiopia and Rwanda.
The group indicated that trading performance in its southern Africa businesses had started to show signs of stabilisation in terms of cement volumes while the business continues to realise year-on-year cement price increases.
“The international cement business has delivered a resilient performance for the period with continued year-on-year revenue growth in DRC [Democratic Republic of Congo] and Rwanda, while PPC Zimbabwe has seen an improvement in EBITDA margins and is fully self-funding,” it said.
The group said it had continued with stringent cost containment supported by a restructured group head office.
Group capex has reduced significantly when compared with the same period last year, and is expected to be at the lower end of the guided range of R600 million to R800m given at the group´s interim results.
“The reduction in capex is expected to counter the negative impact of reduced EBITDA. All business units are meeting their debt obligations other than the DRC operations, which has continued to pay only its interest obligations.”
In the DRC, PPC has successfully negotiated an extension to the capital moratorium which expired in January 2020.