PPC swung back into a full-year profit and saw its topline grow more than a fifth thanks to a strong performance from its operations in Zimbabwe, SA’s largest cement producer reported on Monday.
The company, which is valued at about R5.75 billion on the JSE, also declared an ordinary dividend of 13.7 cents per share, the group’s first in nine years after it scrapped its dividend in June 2016.
Reporting full-year results for the year ended March 2024, PPC said revenue increased 20.6% to R10.058 billion, compared with R8.339 billion in the same period last year. Profit after tax came in at R88 million, compared with a R328 million loss previously.
In an update earlier this month, the group flagged that volumes in Zimbabwe had been boosted by the return of its plant there following a prolonged planned maintenance shutdown in the previous year.
There was a far more muted performance from its South African and Botswana operations, with group cement revenues from these increasing a marginal 5.2%, driven by price increases and increased sales of clinker to Zimbabwe, which positively offset declining cement sales volumes. Revenue from the materials business declined by 6% relative to the previous financial year.
Trading profit also increased more than fivefold to R619 million, from the R117 million reported in the previous year, with R395 million of the increase being attributable to Zimbabwe.
Earnings before interest, tax, depreciation and amortisation improved 38.6% to R1.242 billion, from R896 million last year, while the ebitda margin increased to 12.3% from 10.7% previously.
PPC has been selling its rest-of-Africa businesses to focus on its core South African operations. During the year under review, it concluded a deal to sell its 51% interest in its Rwandan business CIMERWA for $42.5 million (about R780 million at the time)
Even with the improved performance overall, new CEO Matias Cardarelli struck a cautious note about the results, saying in a statement that the company’s problems were “pressing” and that a “meaningful and organisational reset” with some “tough decisions” were needed to ensure a sustainable future.
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He noted the group had faced “sustained underperformance and decreasing profitability over a number of years” and that a comprehensive review of the business during his seven months there had “revealed internal gaps that are also clear opportunities”.
Cardarelli said the group had adopted a “back to basics” approach and an “appropriate focus on operational efficiency”.
FNB portfolio manager Wayne McCurrie said the results were “encouraging” although the company had experienced major struggles over at least 10 years, with new competitors entering the market.
“It’s a very credible result for them and better than what the market expected. They’ve done some huge restructuring and they’ve sold businesses and they’ve got better cash flow.”
He said the better cash flow was also seen in the dividend being paid this year, as well as last year’s results when the company embarked on a share back.
“They obviously had a bit of cash last year as well.”
However, McCurrie said there was only so much that could be done to a company to restructure the business, and that a key consideration for the market now was to see volumes improving.
He said the uptick in Zimbabwe was off a “very low base” due to its plant being down in the previous year, adding that the volume increases there do not repeat again even though the business in that country was performing well.
At the same time volumes were going down in its major operations in SA and Botswana, he said.
“Hopefully better times are ahead and they will get some construction and some volume enhancement, but it is an incredibly difficult business they’re in there. It’s tough.”