PPC Ltd has managed to post strong financial results for the six months ended 30 September 2018.
The company reported an eight percent rise in group revenue to R5.6 billion, largely due to a four percent increase in total cement volumes to 3.1 million tons.
PPC CEO Johan Claassen attributes the company’s resilient results to a diversified portfolio: “Our diversified portfolio has enabled us to offset the weaker South African performance with robust growth in our rest of Africa segment.
“We focused on certain strategic and operational initiatives to ensure greater competitiveness and improved efficiencies. These included reducing interest rate charges, increasing free cash flow, implementing the R50/tonne profitability initiatives and optimising operations.”
SA operations under pressure, but responding well
PPC’s southern African operations, which include Botswana, remained under pressure with revenue declining by 4.2 percent despite a small increase in average selling prices owing to a decline in volumes of three percent.
Local variable costs rose by four percent, mostly due to a 13 percent increase in distribution costs owing to the rise in fuel prices.
The materials business which remains a key part of PPC’s route-to-market strategy for SA cement delivered revenue growth of seven percent and contributed R100 million to EBITDA.
Rest of Africa turns in a strong performance
PPC’s operations in the rest of Africa showed a growth in volume of 34 percent while revenue increased by 36 percent to R1.7 billion. EBITDA grew by 18 percent to R499 million.
“Robust volume growth in Zimbabwe and a positive contribution from the DRC underpinned this pleasing performance,” Claassen explained.
PPC Zimbabwe grew revenue by 30 percent to R1.1 billion on the back of a 29 percent increase in volumes. The performance was supported by an upsurge in construction activity as well as successful implementation of the route-to-market strategy and other sales initiatives. PPC Zimbabwe has increased local input costs to 90 percent and grown its exports to mitigate liquidity constraints in country.
In the DRC, PPC Barnet’s route-to-market initiatives supported the achievement of a market share ranging between 25 percent and 30 percent and R240 million in revenue, while the benefits of right-sizing the business and stringent cost controls delivered EBITDA of R60 million.
Claassen added that the first phase of the upgrade of the CIMERWA plant in Rwanda, aimed at increasing capacity, was completed and record volumes towards the end of the period contributed to strong growth. Revenue of R402 million and EBITDA of R92 million were achieved.
Delivering shareholder value
“We expect trading conditions in South Africa and the DRC to remain difficult. However, we should benefit from a steady performance in Zimbabwe, improved output from CIMERWA and stable political environments in Ethiopia, while the DRC elections are a key milestone to unlock latent infrastructure demand.
“We are committed to executing on our key priorities which aim to improve efficiencies and margins in order to cement our solid foundation and deliver sustainable shareholder value,” concluded Claassen.