PPC Zim performance solid
REGIONAL cement producer, Pretoria Portland Cement (PPC) Limited, says it’s local subsidiary, PPC Zimbabwe, remains an integral part of the business servicing the region.
There is, however, speculation that the local operation is on sale.
There were media reports recently that suggested the possible sale of the subsidiary at the value of US$200 million.
PPC neither denied nor confirmed the reports, but said the group would continue to provide customers with quality product and service to support the development of Zimbabwe.
The group, however, revealed they constantly receive unsolicited approaches for its various parts of the business including the Zimbabwe operation, from a wide range of parties although not shedding more light on the latest overtures.
“PPC regularly receives unsolicited approaches for various parts of its businesses, including PPC Zimbabwe, from a wide range of parties. PPC’s Board has a duty to assess any such approaches on their respective merits and in line with its commitment to safeguard and enhance value for stakeholders.
“Any material developments on these unsolicited approaches will be shared with the market via official channels, as required by applicable regulations.
“PPC Zimbabwe forms an integral part of PPC’s Southern Africa footprint, and the business continues to focus on providing customers with high quality cement to support the development of Zimbabwe,” said the group in a notice to stakeholders.
PPC Zimbabwe has operations in Gwanda, Bulawayo and Harare. In 2016, the group commissioned a US$82 million mega mechanised plant in the Sunway City area in Harare to enhance capacity and efficiency. The group last year revealed it was now enjoying dividends from the capacity expansion initiative coming from the ongoing huge infrastructure projects in the country.
Sources close to the developments who spoke to Bloomberg, said negotiations were still at early stages and the sale of the Zimbabwe operation could help the group focus on the South African business.
They added pricing negotiations were ongoing but there was no guarantee yet the deal would go on.
If successful, this would be a significant inflow to pay down debt or invest in future projects, according to analysts cited. As of September last year, the group was reported to have a debt of R1,5 billion and currently positioning self to tap into the huge construction projects in South Africa’s road network.
During the full year to March 31, the group highlighted the Zimbabwe operations’ cement volume performance registered a double digit growth on the back of an increase to retail demand, increased sales to concrete product manufacturers, and support from Government-funded projects. The country has been on a massive construction exercise cutting across public and private sector projects boosting demand for cement and other construction related products.
“PPC Zimbabwe continues to trade well and ahead of expectations,” said the group in an operating update for the FY22 period.
The double digit growth in Zimbabwe together with Rwanda (CIMERWA) helped lift group performance to achieve an anticipated positive volume growth for the year.
Currently, shares is PPC Zimbabwe are still on suspension on the Zimbabwe Stock Exchange (ZSE).
Together with Old Mutual and Seed Co International, PPC was suspended from the ZSE in 2020 although Seed Co International eventually listed on the VFEX.
Their shares were suspended after it was alleged they fuelled the runaway inflation through exchange rate manipulation on the illegal parallel market . The fungibility of their shares was also suspended.