JSE-listed cement manufacturer PPC on Wednesday said its trading performance in Southern African is starting to stabilise.
In an operational update for the 11 months from April 1, 2019, to February 29, this year, PPC stated that the Southern African businesses had stabilised in terms of cement volumes, while they continued to realise year-on-year cement price increases.
The company’s international cement business had delivered a resilient performance in the period under review, with continued year-on-year revenue growth in the Democratic Republic of Congo (DRC) and Rwanda.
This while PPC Zimbabwe had achieved an improvement in earnings before interest, taxes, depreciation and amortisation (Ebitda) margins and was fully self-funding.
In line with stringent cost containment measures undertaken in recent years, PPC expects its capital expenditure (capex) for the full year ending March 31 to be at the lower end of guidance of between R600-million and R800-million.
PPC said the reduction in capex should offset the negative impact of lower Ebitda.
All of PPC’s business units were meeting their debt obligations, except for the DRC operations, which only managed to pay its interest obligations. In this regard, PPC had successfully negotiated an extension to the capital moratorium for the DRC operations, which expired in January.
PPC in November last year announced it would review the capital structure of the group. It subsequently embarked on a project to refinance and restructure the company.
The first part of the project entailed the relaxation of covenants in respect of South African debt. This was partially complete and was expected to be finalised within the next three months.
Additionally, the restructuring involved the extension of capital repayments with regard to the maturity profile in South Africa, which was in the early stages and progressing well. The second part of this element was to achieve an extension of the capital holiday in the DRC, which would complete a process that started in July last year.
These negotiations in the DRC had concluded and the parties involved were finalising the legal process. This capital holiday extension would extend the capital moratorium in the DRC to January 2022.
The third element of PPC’s restructuring encompassed the unsustainable debt levels in the DRC and its requirement for deficiency funding from PPC.
These negotiations had started and PPC was considering various options for the refinancing and restructuring project that may include a capital injection by interested third parties into the international cement businesses.
PPC would update shareholders on these matters at its interim results release in June; the company did confirm it was not planning on undertaking a capital raise at PPC group level for this purpose.