SOUTH African cement maker, PPC Limited, recorded a weak performance from its Zimbabwe subsidiary compared to other markets it operates in regionally in the six months ended September 30, 2024.
During the half year, liquidity constraints, inflationary pressures, power cuts, taxes and fees and a local currency devaluation in both the parallel and formal markets negatively affected manufacturers.
The weak performance in Zimbabwe comes despite the group reporting that the group revenue of ZAR10,05 billion recorded in its financial year ended March 31, 2024, a 20,6% increase from the prior period, was driven primarily by a strong performance in PPC Zimbabwe.
Consequently, the group reported that trading profit increased by ZAR502 million to ZAR619 million (FY23: ZAR117 million), of which, ZAR395 million of the increase was attributable to Zimbabwe.
Dividends of US$11 million were paid during the year, from a 2023 comparative of US$10 million.
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“EPS [earnings per share] is expected to be between 11% and 31% higher than the prior period and HEPS [headline earnings per share] is expected to be between 0% and 18% higher than the prior period,” PPC said in a trading update for the six months ended September 30, 2024.
“The improvement in EPS primarily due to an overall reduction in the group’s administration and other operating expenditure in the South Africa and Botswana group, which partially offset the weaker performance in Zimbabwe, increased investment income due to higher average cash balances in the current period and a non-recurrence of a pre-tax ZAR53 million impairment in the prior period.”
PPC said these were partially offset by a higher tax charge with the effective tax rate at some 33% from a prior period comparative of 25%. Outside South Africa, the group operates in Mozambique, Botswana, Democratic Republic of Congo and Zimbabwe.
PPC said it was finalising its results for the half year period.
“The financial information on which this trading statement is based is the responsibility of the directors of PPC and has not been reviewed or reported on by the group’s independent external auditor,” PPC added.
“Full details of the group’s performance will be contained in the group’s unaudited consolidated financial statements for the six months ended September 30, 2024, which are expected to be released on or about November 18, 2024.”
The weaker performance comes despite PPC reporting that its operation in Zimbabwe delivered a strong recovery in its financial year ended March 31, 2024.
PPC’s Zimbabwe business had won back the market share it had lost with demand across both residential construction and government funded infrastructure projects.
It lost the demand due to the extended maintenance shutdown of the kiln in the first half of the prior year.
