eBusiness Weekly
Ishemunyoro Chingwere Business Writer
Leading cement producing company, Pretoria Portland Cement (PPC Zimbabwe), recorded a 26 to 30 percent decline in sales for the four months’ period ending 30 July 2019, according to an operational update released on Thursday by parent company and JSE-listed entity PPC Limited.
The period also saw earnings before interest, taxes, depreciation, and amortisation (EBITDA) declining by between 10 to 15 percent.
The company attributed this to inflationary pressures and a weaker economic climate which is, however, largely expected following Government’s macro-economic policies among them floating the local currency as well as luring investment to spur demand for cement.
The decline is, however, not confined to Zimbabwe as the company registered a decline in its Southern African operations with cement sales plunging 10 to 15 percent compared to the corresponding period.
Demand in Southern Africa has been on the decline due to constrained demand owing to a generally subdued demand environment while Importer and blender activity have also contributed to a competitive operating environment.
The company, however, highlighted its continued commitment on optimising its operations in Zimbabwe and implementing its cash preservation strategy to ensure that the local unit is less reliant on the group but rather self-sufficient.
“Trading conditions in Zimbabwe remain challenging, due to liquidity constraints and inflationary pressures,” said the cement manufacturer in an update.
“PPC remains focused on optimising its local operations and implementing its cash preservation strategy to ensure the business is self-sufficient.
“The devaluation of the Real Time Gross Settlement (RTGS) dollar versus the US$ impacted revenue, which declined by 30 to 35 percent in (South African) rand.
“Overall cement sales volumes contracted by 25 to 30 percent due to a weaker economic climate. Cement pricing, which was aligned with input cost inflation, was higher than the previous comparable period.
“EBITDA declined by 10 to 15 percent, while EBITDA margins remained within the guided range of 30 to 35 percent,” reads the update.
On Southern Africa operations, the giant cement manufacturer noted that average prices increased by seven to eight percent which resulted in a sales decline of between 10 to 15 percent compared to the corresponding period.
“Despite a challenging operating environment, average cement prices in Southern African (including Botswana), increased by 7 to 8 percent. Aligned with the objective of focusing on EBITDA enhancing volume growth, cement sales declined by 10 to 15 percent compared to the corresponding period in FY’19 (“comparable period”), in line with the estimated decline in domestic demand.
“Domestic cement demand remains constrained due to a subdued demand environment. Importer and blender activity have also contributed to a competitive operating environment.
