PPC Limited says notwithstanding market conditions, PPC Zimbabwe remains positive about its future prospects on account of the sustained investments in infrastructure by both the government and private sector.
Currently, Zimbabwe companies are battling severe power supply challenges, which have seen most of the corporates adopting alternative power sources such as generators, which are expensive to run.
In an operations update for the 12 months ended March 31, 2023, the group said it had engaged the authorities to reduce the impact of the power cuts on critical industrial sectors such as cement manufacturing and to ensure a level playing field with importers.
“Sales volumes in the second half of FY23 have been muted due to significant power interruptions and a more gradual than anticipated recovery of the market share lost to imports,” read part of the update.
As at September 30, 2022, PPC Zimbabwe reported a decline in sales volumes of 13 percent for the half year to June 2023 due to the negative impact of a longer-than-usual kiln stoppage to implement operational and environmental performance improvements with the expectation that sales volumes would recover in H2 of FY23.
For the full year, PPC Zimbabwe, therefore, expects sales volumes to decline by between 14 percent and 18 percent compared to 2022.
“The outlook for PPC Zimbabwe remains positive and it is expected that EBITDA and EBITDA margins will continue to recover to the levels of FY22 over the coming months,” it said.
For FY23, PPC Zimbabwe paid US$8,8 million in dividends, an increase from US$6,2 million in FY22. PPC Limited said the bi-annual dividend declarations are expected to continue and grow over time.
PPC Limited said the year under review was characterised by different market conditions in each of the markets in which PPC operates, being South Africa and Botswana, Zimbabwe and Rwanda.
It said in South Africa and Botswana, the market had been affected by a decline in disposable income and the absence of any material increase in demand from infrastructure spending.
“Zimbabwe and Rwanda continue to experience growth in cement demand supported by infrastructure spending and retail demand in both countries.
“The one common factor across the markets has been a significant increase in input costs due to the rise of energy costs globally,” PPC said.
The group said deleveraging continued to be a priority in South Africa and Botswana and PPC expected net debt in South Africa and Botswana to be between R725 million and R775 million at year-end down from R1,075 million at 31 March 2022 and R935 million at 30 September 2022.
Gross debt is anticipated to reach targeted levels by year-end, which would allow for distributions while maintaining gross leverage at 1.3 – 1.5x of the full South African and Botswana operations EBITDA, which includes dividends from Zimbabwe and Rwanda.