PPC, a provider of building materials and solutions in sub-Saharan Africa, is buying back R200 million of its shares to add value for shareholders after its debt reduction targets were met, CEO Roland van Wijnen said yesterday.
“We are in a strong position to navigate the current economic cycle in our home market,” he said.
Net-free cash flow came to R392m before financing activities. Finance costs fell 28% to R172m after debt was reduced to R1.2bn from R1.6bn.
“PPC Zimbabwe and now Cimerwa in Rwanda as well, contributed healthy dividends. Both are expected to continue to do so,” PPC chief financial officer Brenda Berlin said in a statement.
Van Wijnen said while there had been a small uptick in infrastructure activity in South Africa, further growth of this market and a stronger economic climate was required to better utilise the group’s capacity.
He said they were hopeful the South African government would expedite the roll out of its infrastructure development programme and protect the local cement market through the introduction of import tariffs.
The Zimbabwe business was benefiting from strong infrastructure-related demand.
In the past year, PPC Zimbabwe’s ability to supply was constrained due to a planned kiln shutdown in the first half and plant stoppages due to power interruptions, which saw volumes for the year ending 16% lower.
In January, the Zimbabwean government reduced the number of import licences, which would support a recovery of PPC Zimbabwe’s market share.
PPC Zimbabwe implemented price increases to recover input cost inflation and continued to generate adequate sales in foreign currency to sustain its operational requirements and pay dividends.
Group revenue was marginally higher at R9.9bn, with the main contributor being South Africa and Botswana.
In Rwanda, Cimerwa’s contribution was boosted by a 29% increase in revenue.
Group earnings before interest tax depreciation and amortisation Ebitda ended at R1.4bn. A number of non-cash items negatively impacted earnings, with group headline earnings per share recording a loss of 8 cents compared to a loss of 3c in the year prior.
South Africa and Botswana cement delivered a resilient performance, with a 1.7% increase in revenue to R5.5bn, supported by average price increases of 8%, which partially offset the high input cost inflation experienced during the period. Ebitda was R674m at a margin of 11.7%.
The coastal region continued to experience good demand for cement and a decline in the level of imports. Sales volumes in this region increased, driven by higher levels of industrial construction activity, specific government projects and increased retail sales.
This growth was offset by continued weak trading conditions in the highly competitive inland region, leaving overall sales volumes down by 5.8% year-on-year.
While demand in the larger inland region in both the retail and the industrial construction segments was softer, the building of distribution centres and housing estates somewhat supported the industrial construction sector, he said.
Cimerwa contributed revenue of R1.6bn and Ebitda of R447m, an increase of 29% and 31%, respectively. In line with expectations, given the planned annual kiln shutdown in the second half, sales volumes were 1% higher for the full year. Regional cement demand remained strong for both domestic use and export, particularly in the eastern Democratic Republic of Congo. Cimerwa declared its maiden dividend with R79m received by PPC in March 2023.
Van Wijnen said he expected the economic climate in South Africa to stay muted. PPC Zimbabwe should recover its financial performance, and Cimerwa was expected to deliver a continued good performance.
BUSINESS REPORT