PPC sees signs of stabilising volumes

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PPC sees signs of stabilising volumes

Published Date: 2020-03-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

PPC sees signs of stabilising volumes

The cement producer says year-to-date sales are down in SA but most of its international operations have continued to grow revenue.

PPC says imports of cement into the local market continue to put pressure on its sales volumes. However, the cement producer has partially mitigated against this by raising prices by 8% to 10% over the past year.

In an operational update ahead of an investor conference this week, PPC said while cement volumes had started to stabilise, there were still down between 16% and 18% due to higher imports and blender activity. Total cement imports rose 17% to about 1.2 million tonnes last year.

Its coastal business was most affected by the imports, while inland volumes were showing signs of an improvement. It said the Concrete Institute had completed a submission on behalf of the industry to the international Trade Administration Commission highlighting the impact of imports on domestic cement production.

Its material businesses including Lime, aggregates and readymix experienced a combined decline in revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) of 5% to 10%. The Lime business was hampered by constrained steel demand, exacerbated by the shutdown of ArcelorMittal SA's Saldanha plant, while the aggregates and readymix businesses experienced muted demand due to their exposure to the domestic construction sector.

Its international cement businesses had delivered a resilient performance year to date, with Rwanda and the Democratic Republic of Congo continuing to grow revenue, while margins in Zimbabwe improved.

The group said it continued to contain costs and reduce capital expenditure in order to improve its financial performance after reporting a loss for the six months to end-September. All of its business units were also meeting their debt obligations, apart from its PPC Barnet operation in DRC, where it has negotiated an extension to a capital moratorium.

Following a review of its capital structure, PPC said it was negotiating with lenders to relax covenants on its SA debt and extend the maturity of its capital payment. It was also finalising a further capital holiday in the DRC to take the new moratorium to January 2022 and was considering various options to refinance the business, including a possible capital injection by interested third parties.

Its shares rose 3.2% to 97c yesterday.





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