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Johannesburg - Cement producer PPC on Wednesday pointed to its credit ratings downgrades to junk status as headline earnings per share declined 93 percent to seven cents, down from from 107 cents, for the twelve months ended 31 March.

PPC chief executive, Darryll Castle, said the cement maker's results were impacted by a liquidity crisis precipitated by an unexpected S&P debt downgrade last year. In May 2016, S&P Global cut PPC's long- and short-term corporate credit ratings seven levels to below investment grade and placed its long-term rating on negative watch.

Castle said the S&P downgrade of PPC resulted in abnormal finance costs being incurred in relation to a liquidity and guarantee facility put in place to ensure that PPC could meet its financial bond repayment obligations. "In addition, this also resulted in a higher interest charge for the year and a higher effective tax rate," Castle said. "Subsequently, the company successfully completed a rights offer, which ensured that PPC was able to reduce its gearing levels to a more sustainable level.

Operationally, volumes were impacted by excessive rainfall in the last quarter of the financial year." Castle said the leading supplier of cement in southern Africa had endured a challenging financial year while still delivering on a number of key initiatives and projects during the year. Group revenue rose by five percent to R9.6 billion, up from R9.2 the previous year, supported by the rest of Africa cement business.

Group earnings before interest, taxes, depreciation, and amortization (EBITDA) was down 13 percent to R2.1 billion. Revenue in southern Africa was flat, with cement volumes increasing by two percent, offset by lower selling prices. The Botswana operations recorded flat volumes while selling prices were down nine percent due to increased competition from imports from South Africa.

The rest of Africa cement segment contributed R645 million to EBITDA, however it did not contribute to profit after tax because of operational ramp-up, depreciation and tax charges. Volumes in Rwanda were up significantly, while gradual ramp-up ensured minimal disruption to the prevailing market.

In Zimbabwe, overall volumes ended down three percent which was better than expected, reflective of the economic headwinds and liquidity challenges in the market. PPC also commissioned the Harare mill in Zimbabwe, and projects in Ethiopia and Democratic Republic of Congo were commenced shortly after year-end.