Wrap Text
Operational Update for the Nine Months Ended 31 December 2017
PPC Ltd
Operating update
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
ISIN: ZAE000170049
JSE & ZSE Share Code: PPC
("PPC" or the "Company")
OPERATIONAL UPDATE FOR THE NINE MONTHS ENDED 31 DECEMBER 2017
OPERATING UPDATE
Johan Claassen, interim CEO said:” We continue to make good progress in terms
of the deliverables relating to our FOH-FOUR strategic priorities. In
particular, we successfully negotiated a two-year moratorium on capital
repayments in the DRC, which has further improved our liquidity position. We
have maintained our market leading position in South Africa despite the
competitive trading environment. The Rest of Africa portfolio continues to
grow, delivering solid results ahead of the same period last year.”
Trading Overview
PPC group revenue has shown an improvement over previous comparative period
ended 31 December 2016, whilst group EBITDA has also tracked ahead of the
previous year. Whilst good operational cost management has prevailed in the
period, corporate action and other costs have negatively impacted on group
EBITDA.
The lack of large infrastructure projects continues to hamper cement volume
growth in South Africa. In the Rest of Africa the robust growth in Rwanda has
been maintained. Our Zimbabwe business has increased volumes significantly
compared with the same time last year. In the DRC, we have managed to ramp-up
market share, although the market remains a significant challenge.
Group Liquidity
The group’s gross and net debt positions in December 2017 improved further when
compared with September 2017. Group capex had also significantly reduced when
compared with the same period last year, and still within the guidance given at
the group’s interim results. Group liquidity has benefited from the recently
announced, two-year capital moratorium negotiated with funders in the DRC.
Engagement with our EPC contractor regarding a possible equity holding is
ongoing. We are in the advanced stages of negotiating terms around the
refinancing and restructuring of the South African debt maturing in June 2018.
We envisage this to be concluded by March 2018.
Southern Africa Cement
PPC estimates that growth in overall cement demand declined by 3 - 4% in South
Africa for the 2017 calendar year. An effective overall selling price increase
of 2.0% percent was realised when compared to the prior period. PPC implemented
a further price increase of 2 - 5% in January 2018. A volume decline of between
1.0 – 2.0% was realised on a year-to-date basis. This is an improvement from
the 1.0 – 4.0% volume decline reported at the half year. Total imports
increased by 23% compared with the same period last year, admittedly off a low
base. Import volumes into the Western Cape, saw a smaller percentage increase.
In Botswana, the market remains muted.
In the Western Cape, we have implemented measures to mitigate the impact of the
ongoing drought and have employed alternatives from an operational perspective
to ensure continuity of supply. From the demand side we are working with local
government, as construction is viewed as a priority economic sector. However,
we continue to monitor the demand situation closely.
Rest of Africa Cement
Rwanda grew volumes by between 20 - 30% during the period. Pricing has remained
relatively stable. Successful implementation of the route to market strategy
with a rise in bulk demand and increased export volumes has contributed to the
positive performance. PPC Zimbabwe continues to exceed expectations, with sales
volumes growing by 30 - 40% compared to last year, supported by the retail
segment. Pricing, in US dollars, has marginally exceeded that of the prior
year. We continue to closely monitor the liquidity situation in Zimbabwe. In
the DRC, monthly sales have tracked progressively better since September 2017.
Whilst the trading environment has remained competitive, with muted growth, we
have succeeded in increasing our market share further towards the end of the
period to between 25 – 30%. In Ethiopia, the provisional acceptance certificate
(PAC) was completed at the end of December 2017. For accounting purposes
Ethiopia equity accounting will start in the first quarter of 2018.
Materials Business
The Materials business continues to experience challenging trading conditions.
Lime saw continued pressure on volumes and selling prices, due to its exposure
to the steel industry. Aggregates and Readymix was negatively impacted by a
competitive construction environment exacerbated by a lack of construction
projects in Gauteng and surrounding areas. EBITDA declines for the respective
businesses have tracked at similar levels as those reported at the group’s
interim results.
Slurry Kiln 9 (SK9)
PPC has made further progress, with the SK9 project now 90% complete.
Commissioning remains on schedule for the second quarter of 2018. The new kiln
will enhance our competitive position in the Inland region through cost,
sourcing, technical and environmental efficiencies.
Update on Proposed Broad-Based Black Economic Empowerment Transaction
We remain committed to completing the full transaction terms of BEE III
transaction by end of the financial year. Details relating to the proposed
transaction will be communicated to shareholders in due course.
Any forecast or financial information on which this trading update is based has
not been reviewed by the company´s auditors.
Sandton
2 February 2018
Sponsor:
Merrill Lynch South Africa (Pty) Ltd
PPC:
Anashrin Pillay
Head Investor Relations
Tel: +27 (0) 11 386 9000
Siobhan McCarthy
Group Manager Corporate Affairs
Tel: +27 (0) 11 386 9000
Financial Communications Advisor:
Instinctif Partners
Louise Fortuin
Mobile: +27 (0) 71 605 4294
Louise.Fortuin@instinctif.com
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