REGIONAL cement maker PPC says its Zimbabwean unit delivered a strong recovery in the current year, registering a 36,6% cement sales volumes growth compared to the prior year.
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 (DRC) and Rwanda.
“PPC’s operation in Zimbabwe delivered a strong recovery in the current year, albeit off a low base following the extended maintenance shutdown of the kiln in the first half of the prior year,” the company said in its annual and summarised consolidated financial statements for the year ended March 31, 2024.
“Zimbabwe won back the market share it had lost with demand across both residential construction and government-funded infrastructure projects.
“Cement sales volumes increased 36,6% when compared to the prior year, although growth has softened as the effect of the stronger base in the H2 FY23 [second half of financial year 2023] starts coming through.”
In the prior year, cement sales volumes were down 15,8%.
Revenue for the year increased by 90,9% in rand terms to R3,36 billion (US$183 million) on strong cement volumes and price increases.
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PPC said the full year impact of the 5% selling price increase that was effected in August 2022 (prior year) and the 4% sales price increase effected in January 2024 also contributed to the revenue increase.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) margins reduced marginally to 20,2% for the full year, but significantly off the half year margins of 24,6% due to high electricity costs resulting from a gradual tariff increase of 76% from October 2023.
Clinker purchases also continued in the second half of the financial year 2024 and the full cost of purchased clinker was 169% higher than the prior year.
Dividends of US$11 million were paid during the year.
The cement giant said Zimbabwe remains debt-free and had unrestricted cash holdings of R40 million (US$2,2 million).
Approximately 80% of PPC Zimbabwe’s cash is held in hard currencies.
Group revenue rose 20,6% to R10,06 billion driven primarily by a strong performance in PPC’s Zimbabwean operation.
Commenting on the group performance, Matias Cardarelli, chief executive officer at PPC, said the group has faced sustained underperformance and decreasing profitability over a number of years.
“Our problems are pressing and it is clear that a meaningful organisational reset and tough decisions are necessary for PPC’s sustainable future,” he said.
“Where we are failing, where we are missing opportunities and what our strengths are, were some of the questions posed in the design of the turnaround fundamentals.”
Through a “back to basics” approach and an appropriate focus on operational efficiency, the CEO said they were looking into their commercial footprint, internal business intelligence data and reliability, logistics model, organisational structure and cost and capital expenditure discipline.
By refocusing the organisation on its core business, fostering a no-nonsense, get-things-done approach, and implementing agility in decision-making processes, he was confident that they could overcome the challenges ahead.
