PPC’s shares leap on trading update

SHARES in PPC rose more than 11 percent on the JSE after the cement maker released an encouraging trading update for the first quarter to end June, with double digit growth reported in Zimbabwe and the Democratic Republic of Congo (DRC). The shares later closed 9.17 percent up at R3.81 on the JSE yesterday.

The group said it had seen an uptick in cement demand in South Africa during the first half of calendar 2017 after a dampened first quarter of 2017.

The cement sales volumes in South Africa declined marginally when compared to the same period in the previous year, which, however, had two less trading days.

“On a like-for-like basis, volumes were up 0.5 percent driven by solid performances in both the coastal and inland areas. Imports have declined by 27 percent compared with the same period last year,” the group said.

Interim chief executive Johan Claassen said the group’s focus was on delivering improved profitability and liquidity in the shorter term, while its longer term strategy remained unchanged.

“More specifically, we will focus our management effort on the new operations in the DRC and Ethiopia, ensuring that they deliver to expectations, while further optimising efficiency in our other businesses,” Claassen said.

In the rest of Africa cement volumes have seen double digit growth compared to the prior period with segment revenue and earnings before interest, tax, depreciation and amortisation are growing ahead of last year.

The group delivered robust volume growth in Rwanda, with its capacity utilisation now reaching 60 percent. Monthly volumes had realised their highest level since commissioning two years ago.

PPC Zimbabwe also saw double digit volume growth compared with last year, and in June it recorded the highest monthly volumes since June 1999. Pricing in US dollars was flat compared with the previous period. The group said the country continued to experience liquidity constraints.

In the DRC, monthly sales had tracked progressively better. “We have doubled our sales volumes in each successive month despite a muted trading environment,” the group said.

But imports from Angola had reduced significantly as competition from local producers has increased.

In Ethiopia cement production only started in June 2017, bur more than 100 000 tons of cement had been pre-sold since February due to high demand.