PPC earn­ings plunge 66pc

Chronicle (Zimbabwe) - - Business Chronicle -

CE­MENT man­u­fac­turer Pre­to­ria PPC Ltd has re­ported a 66 per­cent drop in earn­ings for the six months to end-Septem­ber 2016, as fi­nance costs soared fol­low­ing the ar­range­ment of a R2 bil­lion liq­uid­ity and guar­an­tee fa­cil­ity.

The South Africa head­quar­tered com­pany com­mis­sioned an $85 mil­lion new fa­cil­ity in Zim­babwe last week, opened a plant in Rwanda in Au­gust 2015 and is near­ing com­ple­tion on op­er­a­tions un­der de­vel­op­ment in the Demo­cratic Repub­lic of Congo and Ethiopia.

In a state­ment re­leased yes­ter­day, PPC said prof­its were re­duced to R58m as a re­sult of a 54 per­cent in­crease in fi­nance costs due to the liq­uid­ity “event.”

Fi­nance costs were R509m, up 54 per­cent on the previous pe­riod’s R330m, fol­low­ing R195m in costs in­curred for the liq­uid­ity and guar­an­tee fa­cil­ity as well as other re­lated costs.

“Con­se­quently head­line earn­ings per share were down 66 per­cent to 14 cents while nor­malised head­line earn­ings per share were down 16 per­cent to 36 cents,” the com­pany said.

Rev­enue for the pe­riod amounted to R5.2bn for the six-month pe­riod com­pared to R4.6bn for the six months ended March 31, 2016.

The 15 per­cent rise is at­trib­ut­able to higher group ce­ment sales vol­umes, specif­i­cally in South Africa where ce­ment vol­umes were up 13 per­cent, and Rwanda where vol­umes were up 19 per­cent to 148 000 tonnes.

Per­for­mance for the six months is, how­ever, be­ing com­pared to the last re­ported pe­riod, the six months to March 2016 af­ter the com­pany changed its fi­nan­cial year-end to March from Septem­ber.

Com­ment­ing on the re­sults, chief ex­ec­u­tive of­fi­cer Dar­ryll Cas­tle said the suc­cess­ful com­ple­tion of the rights is­sue “al­lowed us to sig­nif­i­cantly re­duce debt lev­els and strengthen our bal­ance sheet against the cycli­cal na­ture of our busi­ness”.

Ce­ment sales vol­umes in the six-month pe­riod in­creased 13 per­cent, but earn­ings were hurt by weaker sell­ing prices and the de­val­u­a­tion of lo­cal cur­ren­cies rel­a­tive to the US dol­lar in coun­tries where the pro­ducer op­er­ates.

“The Zim­babwe milling plant in Harare has sold its first 1 000 pal­lets of bagged ce­ment.

“Our projects in the DRC and Ethiopia are both at ad­vanced stages and will be com­mis­sioned in the 2017 calendar year,” said Cas­tle. — Fin24

The PPC plant in Bu­l­awayo

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