PPC quits Rwanda
PPC International, a subsidiary of cement giant PPC, has completed the sale of its 51% stake in Rwandan integrated cement manufacturer Cimerwa for $42.5m.
The transaction with Kenyabased National Cement, which is part of East Africa clinker and cement manufacturer Devki Group, advances PPC’s strategy to exit its Central and East African assets, to focus its financial and human resources in its core Southern Africa market.
“I am pleased with the timely completion of the sale of our stake in Cimerwa,” said PPC CEO Matias Cardarelli. “The disposal allows us to focus on our core Southern African markets where we see opportunities to drive improved profitability and secure a more sustainable return on capital.”
The Johannesburg-based construction materials group said on Thursday that all conditions precedent to the disposal were fulfilled and the proceeds received. The effective date of the disposal is January 25.
Cardarelli said the transaction would benefit all parties involved as Cimerwa was now part of a regional group that is better placed to support its growth. The PPC group is net cash positive after receipt of the proceeds of the disposal.
THE DISPOSAL ALLOWS US TO FOCUS ON OUR CORE SOUTHERN AFRICAN MARKETS WHERE WE SEE OPPORTUNITIES
Matias Cardarelli PPC CEO
PPC acquired its stake in Cimerwa, situated in southwestern Rwanda, for a total cash consideration of $69.4m in 2012 before deciding to divest in 2023. The ambitious African expansion strategy it undertook saw the R5.4bn JSE-listed group rack up debt totalling about R5.2bn by the end of September 2020.
PPC has since been on a path to focus on its core markets and subsequently embarked on the disposal. It has reported improvements in its bid to slash its debt, saying debt was down to R381m by end-September from R765m at the end of March.
The cement maker returned to profit in the first half of fullyear 2023, posting headline earnings per share of 26c for the half year, from a loss of 5c previously.
This was despite tough operations in its main SA and Botswana markets, which were hammered by low infrastructure spending and low general retail demand amid weak economies.
On Thursday, PPC said approval by the Common Market for Eastern and Southern Africa (Comesa) Competition Commission, which is not required before implementation of the disposal, was anticipated to be received within 120 days.
PPC’s share price rose as much as 4.25% on Thursday before dropping 2.26% to R3.46.