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Aggregates|Business|Cement|Construction|Environment|Financial|Flow|Readymix|Sustainable|Flow|Infrastructure
Aggregates|Business|Cement|Construction|Environment|Financial|Flow|Readymix|Sustainable|Flow|Infrastructure
aggregates|business|cement|construction|environment|financial|flow-company|readymix|sustainable|flow-industry-term|infrastructure

Subdued construction activity, higher imports cut PPC's sales volumes

5th February 2019

By: Marleny Arnoldi

Deputy Editor Online

     

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JSE-listed cement producer PPC has reported difficult trading conditions for the nine months to December 31, 2018, with cement volumes down between 2% and 3%, against a backdrop of estimated market contraction of between 4% and 5%.

The company said an uncharacteristically weak December retail segment and subdued construction activity had contributed to the market contraction.

Total cement imports had increased by 80% during the period from January to November 2018, compared with the prior comparable period, with imports into Cape Town having increased by 48% to around 209 000 t, although it was still substantially lower than the imports into Durban, which increased by 84%.

PPC on Tuesday said the Western Cape had seen a marginal recovery in volumes since the drought.

Price increases of between 8% and 12% were implemented by PPC on January 15 this year in certain regions.

PPC intends to maintain the price increases that have already been implemented.

The company had also engaged with authorities with regard to imports to ensure industry sustainability and also market stabilisation.

Meanwhile, PPC’s SURERANGE product line continued to gain traction and has positioned the company well against blended product and imports. The business continued to focus on achieving its R70/t profitability initiatives.

Further, the company’s lime business had shown resilience in terms of profitability, while the aggregates and readymix business remained under pressure from a demand and pricing perspective.

PPC’s readymix business remained an important channel to market.

ZIMBABWE

For the nine months period under review, PPC reported that volumes in Zimbabwe had grown by low single digits, owing to operational challenges experienced in the third quarter of the financial year.

Pricing had been aligned with local inflationary increases. Nonetheless, recent policy announcements regarding fuel price increases had placed consumers in Zimbabwe under strain.

The fuel increases and cost of living increases afforded to PPC Zimbabwe employees was expected to impact on earnings before interest, taxes, depreciation and amortisation (Ebitda) margins by between 1% and 2%.

“However, it is envisaged that cost saving measures will ensure Ebitda margins remain within previously guided ranges,” the company said.

PPC Zimbabwe management is implementing a number of initiatives to mitigate the impact of inflation and liquidity constraints on the business and on the broader

PPC group, including through focusing on local procurement, with 90% of input costs sourced locally; increasing exports to neighbouring countries; continuing clinker imports from South Africa; and share buy-backs of PPC shares listed on the Zimbabwe Stock Exchange.

DRC

In the Democratic Republic of Congo (DRC), PPC Barnet continued to operate in a challenging environment, especially during the December national elections, during which infrastructure demand remained subdued.

The business continued to execute on strategic plans to maximise Ebitda and free cash flow generation in order to minimise capital requirements.

PPC was engaging with its lenders to restructure the debt in the DRC and put in place a more sustainable capital structure.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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