Strong demand for cement seen to spur PPC incomes

PPC daily listed on the Johannesburg and Zimbabwe stock exchanges, said demand for cement in Zimbabwe in the first half to March 31 2012 grew to double digits, buoyed mostly by retail customers and concrete product manufacturers. 

The strong  performance in  the  first  four   months  was  however  disturbed  by a major  transformer failure in February  and  March  that  necessitated clinker imports from South Africa  at higher cost. Production has since resumed.

Group cement sales volumes for the period declined by 3% mainly due to weak demand for cement in the Western Cape and Botswana markets. Revenue for  the group  grew by 8% to R3,53 billion,  up from  R3,26 billion recorded in  the  same period last year. Cost of sales for the group increased by 11% to R2,3 billion, attributable to a 30% rise in electricity and diesel charges on average. Administration and other operating expenditure went up by 3% to R324 million, up from R314 million recorded the previous year.

Group Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) grew by 5% to R1,09 billion, up from R1,04 billion the previous year. However, cash generated from operations marginally fell to R890 million   from  R900 million  recorded   in  2011.

Operating profit for   the   group  went  up 4%  to  R0,86 billion, from R 0,82 billion  recorded  in  the previous   year.

Headline earnings per share grew   to 77,6 cents, up  8% from 71,8 cents in the same period last year.

The   company   paid   an interim dividend of 38 cents  per share,  up  9%  from 35 cents  per share  paid  in the  comparative period.

“Our results  improved   despite  being  tempered  by a weak demand  in Western Cape  and fierce competition of cement  prices in all  our regions,” group CEO, Paul Stuiver said in a statement accompanying financial  results. He said administered price increases on electricity and fuel made cost containment difficult. 

In terms of other external operations, PPC said demand for cement in Botswana declined by double digits, owing to a slowdown in  that country’s government infrastructure spending. Lime volumes went up by 6% due to higher demand from steel and alloys industries as well as increased exports to Zambia and the Democratic Republic of Congo.

The company said trading conditions would remain challenging for the remainder of the year, adding demand in Botswana was likely to remain depressed in the second half.

The company forecast revenue from operations outside South Africa  would grow by between 40%-50% in 2016. — Staff Writer.

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