South African cement producer, PPC’s local unit says imports remained low for the year ended March 31, 2018 while exports improved slightly after a strategic initiative to generate foreign currency to support operations.
The group, yesterday, said liquidity issues could offset the benefit of its performance as no dividends can be repatriated to the parent company.
“To mitigate this and the foreign currency liquidity shortage, we will continue to increase localised procurement and grow export volumes in neighbouring countries.
Operational efficiencies and reducing production costs remain a key focus in the short and medium term,” PPC said.
“To mitigate against liquidity risks, PPC Zimbabwe implemented initiatives to accelerate the development and support of local service providers, and an export strategy to generate the required foreign exchange.”
PPC said export sales to neighbouring countries are being maintained to generate foreign exchange and management continues to work on other initiatives to address liquidity challenges.
The listed cement producer said sales volumes increased 40 percent from the previous year, reflecting strong demand and market-share growth in the Harare region.
“Despite the difficult trading environment, PPC Zimbabwe grew volumes over 40 percent from last year, setting new sales records. A successful tobacco, cotton and grain harvest injected additional disposable income into the economy, and a late rainy season extended the period of construction activity. There was also an upsurge in construction as citizens converted monetary investments to property amid liquidity constraints,” PPC said.
PPC said volume growth was supported by a strong presence in the north of the country after the successful commissioning of the Harare mill and the launch of innovative products.
“Route-to-market initiatives were extremely effective in supporting the ramp-up of the Harare mill. National cement demand remains below production capacity and regional cement prices are significantly lower than those in Zimbabwe,” the company said.
The government has in the past raised concerns about high cement prices as it pushes its low-cost housing agenda.
However, PPC says these factors will increase competition and pressure to reduce cement prices, despite an inflationary environment.
PPC Zimbabwe (70 percent held by PPC SA) comprises a clinker manufacturing operation at Colleen Bawn and two milling plants in Bulawayo and Harare.
PPC said revenue grew by 34 percent to R1 813 million (approximately $135 822,54) compared to R1 352 million ($101 286,31) achieved in the same period last year, supported by volumes which increased by over 40 percent from last year.
Earnings before interest, tax, depreciation and amortisation grew 31 percent to R572 million (2017: R438 million), with margins maintained at 32 percent