Cement manufacturer PPC has advised that its sales volumes continue to rise after having experienced muted sales in April and May during the harder levels of lockdown in South Africa and other African countries.
The company’s sales volumes started recovering in South Africa and Botswana in June, with double-digit year-on-year growth recorded since then.
In the three months ended September 30, cement sales volumes increased by between 20% and 25% year-on-year.
The sales volumes in October grew by between 15% and 20%, compared with October last year.
PPC says the increased volumes are primarily retail led, as consumers had more disposable income as a result of reduced discretionary spending on other items when movement was restricted during lockdown, as well as extra income as a result of reduced interest rates and various social relief grants.
The company also started experiencing the positive impact of increased infrastructure spending, which it hopes will carry the strong demand once retail sales volumes normalise.
PPC further advises that its international operations were less affected by the Covid-19 pandemic.
In aggregate, total cement volumes sold also showed double-digit growth in June to September, compared with the same period last year.
For the first six months of the 2021 financial year, PPC Zimbabwe and PPC Barnet in the Democratic Republic of Congo (DRC) experienced about 5% to 10% volume growth, respectively, compared with the first six months of the 2020 financial year.
In the period July to September, sales volumes in PPC Zimbabwe and PPC Barnet increased by between 35% and 40% and 20% and 25%, respectively, compared with the same period in 2019.
PPC says October had seen more moderate growth in cement volumes for PPC Zimbabwe at about 5% year-on-year, while PPC Barnet continued to experience strong growth, with cement volumes up by between 25% and 30% year-on-year.
In Rwanda, PPC’s Cimerwa business experienced between 5% and 10% volume growth from April to September compared with the same months of last year. In the months July to September, sales volumes increased by between 15% and 20% year-on-year.
Cement volumes in October continued to show good growth, of between 25% and 30% compared with October last year.
Despite the continued positive sales momentum, PPC remains cautious on the outlook for the remainder of the 2021 financial year, given the ongoing health crisis and its resultant impact on economic activity in the country’s operating jurisdictions.
The company remains focused on cash preservation, lower operational costs and positioning the business for recovery.
This while PPC started undertaking a restructuring and refinancing project earlier in the calendar year, with the aim of implementing a sustainable capital structure and improving the company’s investment prospects.
PPC says it continues to make positive progress with this project, expecting to finalise revised facilities documentation with its South African lenders before the end of November.
Meanwhile, the company’s restructuring negotiations continue constructively with its DRC lenders on the basis of an agreed term sheet and de facto standstill agreed in September.
PPC is on track to test investor appetite regarding recapitalising the DRC operations before the end of December.
The company will provide an update on its restructuring undertakings early in December when it reports its interim results.