PPC expects improved profit performance of up to 40% higher
SHARES in PPC, which is the subject of several merger and takeover offers, yesterday rose a further 1.4 percent on the JSE yesterday to close at R7.22.
This after the listed cement and lime producer reported that its headline earnings a share for the six months to September was expected to be between 30 percent and 40 percent higher than in the previous corresponding period.
This translates into headline earnings a share of between 18 cents and 20c for this reporting period compared with 14c in the previous year.
The company said that the key aspects to the improved profitability performance of the group related to earnings before interest, tax, depreciation and amortisation (Ebitda) growth from the rest of Africa cement business segment because of robust growth in Rwanda and Zimbabwe and a significant reduction in finance costs, mainly because of recapitalisation and once-off liquidity and guarantee facility agreement fees incurred in the previous reporting period.
PPC said group Ebitda was expected to increase by between 3 percent and 6 percent compared with the previous period.
It added group Ebitda was negatively impacted by costs related to corporate action, legal costs and exchange rate fluctuations and excluding these impacts, Ebitda would have risen by a further 5 percent to 10 percent.
PPC said net profit attributable to PPC shareholders was expected to increase by between 180 percent and 200 percent.
It said group net debt levels had remained in line with that reported in the operating update announcement in September and the group remained adequately capitalised to meet its debt repayment obligations.
PPC added that debt restructuring negotiations with the funders, both in respect of the group’s South African debt and the DRC funding agreements, were progressing well.
It said evidence of the group’s ability to generate strong cash flows was the between 50 percent and 60 percent increase in cash in the reporting period compared to the prior comparable period.
PPC did not mention in the trading update the merger offers received. Last month it reported that it had received a credible expression of interest from LafargeHolcim to combine some of their African assets.
This followed PPC in September reporting that apart from an offer from AfriSam and Fairfax Africa, it had received two indicative proposals from other unidentified industry players looking to achieve Pan-African combinations.
Dangote Cement, Africa’s biggest cement producer, in September reported that it was considering a merger with PPC, but early last month withdrew its offer. PPC said last month that the non binding expression of interest from LafargeHolcim contemplated a combination of certain African assets, a partial cash offer and a special dividend.
It said LafargeHolcim, following the completion of a due diligence process, intended to submit a firm intention offer by November 20.
The process in respect of the Fairfax Africa Investments partial offer announced on September 4 was still proceeding according to the announced independent board process.