Regional cement producer, PPC Limited is forecasting its local unit – PPC Zimbabwe’s volume performance for the half year to September 30, 2021 to be ahead of prior year level on the back of strong retail demand and support from Government funded projects.
The positive volume performance is despite the challenging operating environment that was characterized by Covid 19 induced lockdowns which caused supply chain disruption across sectors.
In an operating update for the period, the group said: “PPC Zimbabwe continues to trade ahead of expectations despite the challenging macro-economic environment. For the six months ending 30 September 2021, PPC Zimbabwe’s cement sales volumes are expected to increase by 14 percent to 18 percent year-on-year benefiting from retail demand, increased sales to concrete product manufacturers, and support from Government-funded projects.
“Relative to the comparable period in 2019, cement sales volumes are expected to increase by 25 percent to 29 percent.” PPC Zimbabwe is currently suspended from trading on the Zimbabwe Stock Exchange.
Overall, the group expects total cement sales volumes to increase by 10 percent to 13 percent year-on-year, with double digit volume growth in most business units.
The Group’s materials businesses also experienced double-digit year-on-year growth in sales volumes
Cement sales volumes in the region are forecast to increase by 10 percent to 13 percent year-on-year for the half year period due to strong retail demand. Relative to the comparable period in 2019, cement sales in the region are expected to increase by 3 percent to 6 percent.
“Growth in cement sales volumes in the informal and rural markets continues to outpace other segments of the market. After experiencing a lagged recovery relative to the inland region, PPC experienced double-digit year-on-year growth in cement sales volumes in the coastal region, albeit from a lower base, with most of the recovery in sales occurring after July 2021.
“PPC remains cautious on the outlook for demand in the coastal area due to a slow recovery in commercial construction activity,” said the group.
However, cement imports continue to threaten the sustainability of the South African cement industry, with total imports increasing by 14 percent year-on-year after adjusting for the impact of the hard lockdown in the prior comparable period.
The group estimates that imports will account for approximately 10 percent of total industry volumes by the end of 2021.
According to the group, although the South African cement industry has experienced an upswing in demand following the initial COVID-19 related hard lockdowns in 2020, total industry demand is below levels that will incentivise new investments in the industry.
In Rwanda, the Covid-19 related lockdowns had a knock on effect sales which is also expected to result in a decline in revenue in rands.
As result of increased construction activity, the readymix and aggregates businesses experienced a recovery in demand the half year period and volumes expected to rise by 33 percent to 37 percent year on year.
Fly ash sales volumes are expected to increase by 2 percent to 5 percent. Overall, revenues for the materials division are expected to increase due to the increase in sales of readymix and aggregates.
Although PPC continues to face uncertain trading conditions, the group is well-positioned to benefit from growing cement demand in the territories in which it operates.
Said the group: “PPC will also continue to take the necessary measures to ensure that it can continue serving its customers, protecting its employees, and implementing strategic initiatives to ensure financial sustainability through all demand cycles.”