PPC slides 8% on JSE despite hopes of swing back to profitability

PPC Cement bags on a conveyor at PPC De Hoek in the Western Cape. SUPPLIED.

PPC Cement bags on a conveyor at PPC De Hoek in the Western Cape. SUPPLIED.

Published Jun 13, 2024


PPC shed 8.5% to at R3.01 per share in midday trade on the JSE yesterday despite a trading update that highlighted the cement-maker’s return to profitability on the back of a stronger performance by its Zimbabwe unit in the year ending March 31, 2024.

This sustained the company’s 3.52% and 4.91% losses in the 30 days and six months comparatives respectively, although in the past year, PPC is up a remarkable 40% on the JSE.

The company said yesterday it expects its earnings per share (EPS) and headline earning per share (HEPS) for the period under review will be higher by at least 20% compared to the previous contrasting period.

“This difference is primarily due to the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period in which it had an extended kiln shutdown,” PPC said.

Group EPS in PPC were expected to be 25 cents to 30 cents compared to a loss per share of 43 cents in the year to end March, 2023.

HEPS for the same period will amount to between 27 cents and 18.5 cents, higher than the nine cents per share headline loss a year earlier.

The Zimbabwean subsidiary had switched its functional currency from the Zimbabwean dollar to the US dollar as sales mixes across the Zimbabwean economy trend towards the greenback.

Zimbabwe has, however, in the past few weeks introduced a new currency, the ZiG, which the government says is indexed against the price of gold.

Nonetheless, Zimbabwe-listed and other companies have begun to switch their reporting and functional currencies to the US dollar, which is legal tender in the country, alongside other multiple currencies.

For PPC, the switch to the US dollar “had a positive impact given the elimination of net monetary losses of R131 million arising in the prior period due to hyperinflation” accounting policies.

Earlier this year, PPC completed the disposal of its 51% interest in Cimerwa, which is situated in south-western Rwanda.

Due to the disposal, financial results for the period April 1, 2023 to January 25, 2024 will be shown as discontinued operations, PPC will report in its full year.

“The prior period comparative figures have accordingly been represented to exclude Cimerwa’s results and to disclose its results separately as discontinued operations,” the company said.

In the 10-month period to the end of January, cement sales volumes for PPC in its South Africa and Botswana markets decreased by 4% compared to the previous contrasting period extending the decline trend recorded in the first half of the company’s operating year.

“Sales volumes in the coastal region experienced a sharper decline than in the inland region, mainly due to a weaker retail market and the lack of infrastructure projects in the area,” the company said in March.

There was some respite though, as price increases implemented in July, 2023 and January, 2024 helped to offset the decline in volumes with the South Africa and Botswana cement business increasing revenue by 6% in the 10-month period.

PPC raised earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins for the 10-month period marginally from 10.7% to 11.4% although this was still below the 12.6% reported at the half year.

The performance in the South Africa and Botswana cement market had deteriorated since the end of the current period, PPC said in March.