Cement producer PPC produced double-digit earnings for the first half of the 2018 financial year, with the JSE-listed group’s rest of Africa cement operations delivering a shining performance.
For the six months ended September 30, net profit attributable to PPC shareholders increased by 188% to R294-million.
Earnings a share increased by 54% to 20c, while headline earnings a share rose by 36% to 19c during the half-year under review.
Group earnings before interest, taxes, depreciation and amortisation (Ebitda) expanded by 4% to R1.2-billion, supported by a 25% Ebitda growth to R422-million from the rest of Africa, said CEO Johan Claassen.
The Southern Africa cement division maintained its Ebitda of R740-million.
Ebitda of R63-million and R40-million were generated by the lime and aggregate and readymix divisions respectively.
Corporate action and other nonrecurring expenses amounted to R53-million, while the impact of a stronger exchange rate reduced Ebitda by R43-million on a comparable basis.
Excluding these impacts, group Ebitda would have risen by 12%.
Group revenue increased by 1% to R5.2-billion, with total cement volumes up 2% to about three-million tonnes.
Revenue in Southern Africa cement, which includes Botswana, was marginally down at R2.9-billion, with the segment achieving 2% higher realised average selling prices but a 1% reduction in volumes.
Revenue from the rest of Africa was recorded as R1.25-billion in the first half of the financial year, up from the R1.1-billion recorded in the prior corresponding period.
In the materials divisions, the lime segment produced revenue of R390-million, while the aggregate and readymix unit delivered revenue of R646-million.
PPC also reported a decline in net debt from R4.7-billion in March 2017 to R4.4-billion by September 2017.
The group further improved its balance sheet by slashing finance costs by 44% post a rights issue to R285-million.
“The decrease was owing to the benefits of the rights issue and the liquidity and guarantee facility agreement fees incurred in the previous reporting period,” the company said on Thursday.
AFRICA’S STERLING PERFORMANCE
The group posted the improvements following a period of “transformation” as new investments in Zimbabwe and Rwanda contributed positively to growth during the half-year under review.
“PPC Zimbabwe grew volumes by more than 25% compared with last year, achieving new sales records in the process,” explained Claassen, noting that the commissioning of the Harare mill supported volume growth in the north of the country.
PPC also pointed to the success of operations in Rwanda, with robust volume growth and capacity use above 65%. Sales volumes grew by more than 30% for the period.
New investments in the Democratic Republic of the Congo (DRC) and Ethiopia will be fully commissioned during the second half of the current financial year, with both plants completed and in the process of being tested.
“PPC has reviewed its priorities over the last five months and will continue to focus on these key priorities in the next 12 months. These key priorities are in optimising the financial, operational and human capital elements of the business,” the company highlighted.
This will also ensure that the restructuring of the South African and DRC debt is finalised and implemented.
“The group has made significant progress in improving liquidity and smoothing the maturity profile of the business. This is through the pending restructuring of Southern Africa debt maturing in June 2018 to a more smoother payment profile of between three to five years,” he said.
Significant progress has been made on finalising the DRC funding agreements, with a term sheet received from the funders, highlighting a 24-month capital holiday, which will reduce the required deficiency funding from PPC.