Cement firm has drop in SA sales

PPC managed to offset a slight decline in cement sales in its home market with 30% growth from its rest of Africa division.

The group’s overall revenue grew by 7% to R10.3billion for the year to end-March.

The bulk of PPC’s profits get swallowed by tax, its results released yesterday morning showed.

For its 2018 financial year, PPC reported its tax rate was 68% – an improvement on 85% in its 2017 financial year.

“The high rate was mainly due to the non-deductibility of certain abnormal costs, including impairments, and Zimbabwe tax penalties. The sustainable tax rate for the group in future should range between 30% and 35%. Cash tax increased by only 11%,” the results statement said.

The group grew its pre-tax profit by 34% to R242million, and its tax bill grew in tandem by 34% to R205million, leaving a net profit of R37-million.

PPC shareholders have not received a dividend since 2016 as it whittles down debt taken on to expand into the rest of Africa.

Net debt was reduced to R3.8-billion during the reporting period from R4.7-billion in the prior year.

After spending R2-billion on new plant and equipment in 2017, capital expenditure fell to R921-million.

“The peak of the capex cycle was in 2017 and, in future, group capex will be concentrated on maintenance and efficiency improvements,” PPC said.

PPC reports SA and Botswana as its Southern Africa cement division, which suffered a 0.1% decline in sales to R5.7-billion and an 11.5% decline in net profit to R394million. “We estimate that volume performance was better than the overall market, despite a particularly depressed first quarter in 2018, where all regions recorded a slowdown.

“Total imports rose 32% compared with the same period last year, although off a low base. Import volumes into the Western Cape increased marginally by 6.5%,” the results statement said.

“In Botswana, the market remained subdued with a marginal decline in volume demand.”

The rest of Africa division – which houses its operations in Zimbabwe, Rwanda, Democratic Republic of Congo (DRC) and Ethiopia – grew sales by 30% to R2.8billion, but its net loss widened to R265-million from R1million. This loss included a R165-million impairment of PPC’s recently completed plant in DRC.

Its lime division increased revenue by 3.8% to R849million, but net profit fell 22% to R66-million. —