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PPC profit plummets from R731million to R27 million

Regional cement producer Pretoria Portland Cement (PPC) says volumes at its Zimbabwe operation dropped three percent in the full year to March 31, as cash shortages persist.

Prices suffered in US dollar terms, falling 10 percent during the year.

The appreciation of the South African rand by an average of nine percent during the year also impacted on profitability.

Profit after tax in the period declined 96 percent to R27 million from R731 million last year.

Group revenue rose by 5 percent to R9 641 million from R9 187 million in the previous year.

“The growth was supported by the rest of Africa cement business which grew revenue by 9% and the aggregates and readymix segment which grew revenue by 23 percent.”

“The tough operating environment was intensified by the strengthening of the US dollar against regional currencies, leading to further competition in the market. Importation of cement declined slightly compared to the previous year mainly due to the introduction of cement import tariffs of US$100 per ton, which was effective 1 October 2016,” said the company.

“The liquidity challenges in the domestic market continue to be of concern.”

The group said Zimbabwe’s deteriorating economic environment and resultant liquidity issues have resulted in challenges being faced with processing of foreign payments by the banks in the country.

The group added that management team was working hard to diversify revenue streams, increase localised procurement and grow export volumes.

PPC, which opened its Harare plant in November last year, said the new investment expected to reduce outbound logistics costs while increasing accessibility to the northern markets.

“The company is well positioned for the expected economic upturn and infrastructural developments and investments in the medium term. Harare and Bulawayo operations are suitably located to grow exports into neighbouring countries and this will be given priority.”

The group has operations in South Africa, Botswana, DRC, Rwanda and Ethiopia.-The Source

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