PRETORIA Portland Cement Company Ltd (PPC) has blamed its R9,6 million operating loss at Porthold on the difficult socio-economic conditions prevailing in Zimbabwe.
FONT face=”Verdana, Arial, Helvetica, sans-serif”>PPC is listed on the Johannesburg and Zimbabwe stock exchanges.
In its reviewed interim results for the half-year ended March 31 2003 PPC said operating profits increased by 52% to R376,8 million with all businesses reporting increased operating margins and profitability for the first half except in Zimbabwe.
“As anticipated, Porthold reported a small operating loss under the difficult socio-economic conditions prevailing in Zimbabwe,” the company said.
PPC said its Zimbabwe operation, Porthold operated under an extremely difficult environment returning an operating loss of R9,6 million in the half.
During the same period previously the company had chalked up an operating profit of R1,5 million.
The company said: “Government regulated cement prices were not increased in the first half while abnormally high levels of inflation continued to prevail. The plant at Colleen Bawn was shut down on February 17 2003 following a shortage of coal. The company then proceeded directly with a planned maintenance shutdown and reopened the plant on April 28 2003.”
PPC however said overall operating profit including Porthold and associate companies increased by 41% from R222,9 million to R313,5 million.
The company said the current value of the rand would significantly reduce its export competitiveness and accordingly cement export revenues and margins would be much lower during the second half.
“Porthold is unlikely to contribute to earnings while the socio-economic crisis in Zimbabwe continues,” PPC said. “The government-regulated cement prices, which were set in April 2002 and not reviewed since that date, were lifted in May 2003. Prices will however remain subject to monitoring by authorities. Continuing interruptions relating to the supply of electricity diesel and coal are likely to impact on production.”
The company said the cooler and clinker handling facilities had recently been upgraded and the business remained well positioned to benefit from “any improvement in Zimbabwe and from exports”.
PPC said the payment of the special dividend of R6 per share in January this year and higher levels of tax had reduced the company’s cash position and accordingly income from investments “will be lower in the second half”.