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Operating Update for the five months ended 31 August 2022
PPC Ltd
(Incorporated in the Republic of South Africa)
(Company registration number 1892/000667/06)
JSE ISIN: ZAE000170049
JSE code: PPC ZSE code: PPC
(“PPC” or “company” or “group”)
OPERATING UPDATE FOR THE FIVE MONTHS ENDED 31 AUGUST 2022
GROUP PERFORMANCE
For the five months ended August 2022, PPC's group revenues, excluding
Zimbabwe, which is impacted by hyperinflation accounting, increased
by 9%, driven by robust demand in Rwanda. Group cement sales volumes
(including Zimbabwe) for the five months ended August 2022 were in-
line with the previous comparable period as subdued demand in South
Africa and the impact of a maintenance-related kiln shutdown in
Zimbabwe were offset by robust demand growth in Rwanda. In addition,
cash generation remains positive and the group reduced net debt from
31 March 2022 levels.
SOUTH AFRICA & BOTSWANA CEMENT
Cement sales volumes in South Africa and Botswana decreased by 1%
period-on-period for the five months ended August 2022. Cement sales
volumes in the inland region decreased after experiencing a slow start
to FY23, offsetting the high single-digit demand growth in the coastal
areas. Inland cement sales volumes were negatively impacted by above-
average seasonal rainfall and sluggish retail demand at the beginning
of FY23, which was partially offset by increased sales to the
industrial and construction sectors. Cement sales volumes in the
coastal region increased due to a decline in imports in the Western
Cape, a recovery in industrial construction activity and the
resumption of postponed government projects. The average selling price
increased by 5% during the period under review. This was insufficient
to fully offset the impact of input cost inflation as the cash cost
of sales increased by low double-digits in percentage terms. PPC will
continue its efforts to counter input price inflation through price
adjustments, operational efficiencies and improved industrial
performance. Coming off a relatively high EBITDA base in the first
half of FY22, PPC continues to prioritise cash generation by
optimising net working capital and adhering to stringent capital
allocation. This contributed to South Africa and Botswana's gross debt
decreasing from R1.2 billion on 31 March 2022 to R1.0 billion on 31
August 2022.
ZIMBABWE
The cement market in Zimbabwe continued to show robust high single-
digit growth as a result of both residential construction and
government-funded infrastructure projects. PPC Zimbabwe implemented
planned maintenance at the beginning of FY23 and recorded a 7% decline
in cement sales volumes period-on-period.
However, the resumption of clinker manufacturing by PPC Zimbabwe at
the end of May 2022 enabled improved sales volumes in the second
quarter of FY23.
PPC Zimbabwe implemented US$ price increases of 5% in March 2022, 2%
in April 2022 and a further 5% increase in August 2022.
PPC noted increased availability of foreign currency in the Zimbabwean
economy, with more than 70% of cement sales during the period under
review occurring in foreign currency.
PPC received a US$4.4 million dividend in June 2022 and anticipates
an additional dividend to be declared upon the publication of PPC
Zimbabwe's interim results in November 2022.
RWANDA
CIMERWA continues to see strong demand for cement in all its markets,
with cement sales volumes increasing by 16% period-on-period for the
five months ended August 2022. CIMERWA’s domestic cement sales
benefited from increased demand from government-sponsored
infrastructure projects and a recovery in general building activity.
In addition, cement exports benefited from sustained demand in eastern
Democratic Republic of Congo and the expansion of CIMERWA's route to
market initiatives. CIMERWA's efforts to enhance industrial
performance and reliability are beginning to bear fruit with the
benefits reflected in the increase in cement sales volumes.
OUTLOOK
Given the current economic climate, the group will continue to enhance
operational efficiencies to mitigate the impact of rising input cost
inflation. Without a significant increase in infrastructure
investments, cement demand in South Africa is anticipated to remain
subdued. PPC South Africa is well positioned to benefit from an
increase in cement demand with additional capacity available to
capture an upswing in demand without additional capex investment
required. PPC Zimbabwe anticipates a recovery for the balance of the
financial year and the outlook for CIMERWA remains positive.
PPC is participating in the RMB Morgan Stanley Big Five and Off Piste
Investor Conference in Cape Town on 14 September 2022 and the
presentation to be given at this conference is available on the
company’s website
www.ppc.africa/investors-relations/reports/?t=presentations-allocate
Sandton
14 September 2022
Sponsor:
Questco Corporate Advisory Proprietary Limited
Financial Communications Advisor:
Instinctif Partners
Louise Fortuin
Mobile: +27 71 605 4294
Date: 14-09-2022 07:30:00
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