Harare – PPC which holds a majority stake in the Zimbabwe unit, on Monday announced that it placing its dividend from Zimbabwe operations to government bonds in that respective country in light of forex challenges.
Zimbabwe is presently grappled with an acute cash shortages which is threatening to destabilize the financial sector. The amount of forex has sharply declined especially when compared to the overall market liquidity as measured by money supply.
As a consequence foreign companies with local operations have found it difficult to access declared profits for an estimated 3 year period.
Among these are AB InBev which is parent to Delta Corporation, Zimbabwe’s largest beverage producer.
Other companies affected by the crisis include BAT whose parent is British domiciled. Other companies such as Econet, a leading telco media and technology company have failed to offset creditors among other payables and the predicament is prevalent across all companies operating in Zimbabwe.
It is against this background that PPC has sought to sweat its dividend especially in a now hyperinflationary environment. Most companies have partaken in investing RBZ’s savings bond which has a yield of 7 percent.
In a results presentation for the half year period the company also said it investigating opportunities in downstream businesses so as to sweat the growing cash balance.
The report also showed that Zimbabwe operations now constitute 80 percent of the total cash resources on balance for operations outside of South Africa, which compares to 58 percent a year ago.
In key strategic developments which sought to manage the present crisis, PPC said 90 percent of its inputs are now locally sourced, while it has sought to increase its exports from Zimbabwe.
The company said it has been able to access all its exports proceeds from RBZ and that it has also managed to meet its Zimbabwe specific interest obligations utilizing cash generated from the country.
However PPC said the current forex challenges pose a risk to business sustainability and continuity compared to the overall market liquidity as measured by money supply.
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