REGIONAL cement maker, Pretoria Portland Cement (PPC) says its Zimbabwean unit recorded a 19% decline in revenue in the financial year ended March 31, 2023 due to an extended kiln shutdown which restricted sales volumes.
PPC operates a clinker plant at Colleen Bawn in Gwanda in the southern part of the country, as well as cement-milling plants outside Bulawayo and Harare.
Apart from South Africa and Zimbabwe, PPC also has units in Botswana, Ethiopia, the Democratic Republic of Congo and Rwanda.
According to its summarised consolidated financial statements for the year ended March 31, 2023, PPC said revenue at the Zimbabwe unit decreased by 19% to R1,8 billion (about US$94,9 million).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 7% to R365 million, but margins increased due to price increases to 20,8%.
“The impact of the planned extended kiln shutdown in the first half of the year for special maintenance and the installation of the bag house and bucket elevator resulted in limited clinker production ultimately restricted the volumes of cement sold. In addition, plant stoppages due to power interruptions negatively affected performance,” the report read in part.
“Volumes year-on-year were down 16% despite robust cement demand from concrete product manufacturers and government-funded infrastructural projects.
“Government reduced the number of import licences in January 2023, which will support the recovery of PPC’s market share.
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“PPC Zimbabwe was able to implement US$ (United States dollar) price increases to recover input cost inflation.”
Further, the report notes that PPC Zimbabwe continued to generate adequate sales in foreign currency to sustain its operational requirements during the period and pay dividends.
The regional group received US$8,9 million in dividends during the year totalling R147 million net of withholding tax, compared to US$6,2 million in the prior year.
Group revenue marginally increased to R9 902 million on weak macro environment in South Africa, while EBITDA margin reduced 1,4% points to 13,7% as input inflation was kept under control.
Revenue, excluding dividends, increased 1% to R6 586 million.
During the current year, the group realised a net profit of R23 million from the disposal of the previously equity-accounted investment in Habesha.
Notwithstanding group profit before tax declining to R93 million, taxation increased 17% to R242 million.
The group said the current year tax charge was significantly negatively impacted by non-cash items of R195 million. These non-cash items are primarily due to the SA obligor group not recognising deferred tax assets and PPC Zimbabwe hyperinflation impacts.
Capital investment remained suppressed and reduced to R415 million. The reduction in spending was largely attributable to South Africa and Botswana cement (R53 million reduction) and Zimbabwe (R69 million reduction).
The SA obligor group’s gross debt (excluding capitalised transaction costs) declined to R931 million on March 31, 2023 in accordance with the debt repayment terms. Unrestricted cash holdings in the period under review were R131 million, leaving net debt at R800 million.
The group said Zimbabwe was debt-free and had unrestricted cash holdings of R118 million.
The cash balance declined from R353 million as at September 30, 2022 due to a dividend of US$5 million paid in November 2022 and lower US$ balances at the year-end with the cash holdings in Zimdollars depreciating significantly against the rand.
Seventy percent of PPC Zimbabwe’s cash is held in hard currencies, it said.
