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Africa's largest cement maker, PPC, has flagged continued volume pressure in SA, but double-digit price increases and a stabilisation of volume has still helped with a lift in operating profit, while it has received a boost from its other operations.
Group revenue for PPC's SA and Botswana operations rose 5% in the five months to end-August, the group said in a voluntary update on Wednesday, and while cement sales volumes fell 6%, core profit increased 5%.
The group reported average selling price increases of 10% in this region, saying that cement volumes in the inland region continued their decline, albeit at a significantly lower rate. The coastal reason was under pressure from heavy rainfall and weak retail demand. The inland region encompasses SA with the exclusion of the Western and Eastern Capes, and part of the Northern Cape.
PPC, valued at about R4.4 billion on the JSE, had 1 840 employees in SA as of its 2023 year, just over 70% of its total workforce. The company also operates in Zimbabwe and Rwanda.
PPC said it will continue its efforts to counter input price inflation through price adjustments, operational efficiencies and improved industrial performance. SA and Botswana group’s gross debt was unchanged, but cash has increased from R131 million to R283 million, leaving net debt at R648 million at the end of August from R800 million at the end of March.
Outside of SA its volumes fared better, with PPC saying that at a group-level volumes rose 3%, amid "exceptionally strong" growth in Zimbabwe and, to a lesser extent, Rwanda.
The cement market in Zimbabwe continued to show growth as a result of both residential construction and government-funded infrastructure projects, the group said. PPC Zimbabwe continued to win back market share during the period following the planned maintenance shut down in the prior year and cement sales volumes increased 42%
"PPC’s outlook remains unchanged and it will continue to focus its resources on improving profitability and cash generation in South Africa while preserving its sound market positions in Zimbabwe and Rwanda," it said.
"There continues to be a need for operational efficiencies and cost containment measures to mitigate rising input costs as the economic climate in PPC’s key South African market remains muted."
PPC Zimbabwe anticipates a continued recovery and the outlook for Rwanda remains positive, it added.
PPC's shares were up by less than 1% on Monday but are up more than a third for the year to date.
