PPC warns of profit jump, delays results due to Zimbabwe currency considerations

HARARE- Dual listed PPC has issued a profit warning to its respective shareholders saying it expects an unusual growth in profitability for the just ended financial year which covers a period April 2018 to March 2019. The full year results were expected to be released today.

In a statement on JSE SENS, the company however said it will not be able to release its results today as it is making adjustments factoring monetary policy measures in Zimbabwe. Other regional operations discounted Zimbabwe earnings by a factor of 3.3 times in line with the implied exchange during the final quarter of 2018. this will inadverntly reduce Zim earnings in rand terms.

PPC is a cement manufacturing company with operations in the southern Africa region. The collective capacity of its plants currently stands at 11.7 mtpa spread across 18 plants in 6 countries. The six African countries include South Africa, Botswana, Democratic Republic of Congo, Ethiopia, Rwanda and Zimbabwe.

In Zimbabwe, where the company has a secondary listing, 3 plants with a combined capacity of 1.4 mtpa are operated and the produce is sold for both domestic and foreign markets. At this combined capacity, PPC is the largest cement producer in Zimbabwe.

In a trading statement, PPC said financial results for the period to 31 March will differ by more than 20% from the same period last year.

Earnings before interest tax and depreciation is expected to increase by about 7% while profitability is expected to grow by between 70% and 90% partly pushed by a gross reduction in debt levels.

The Zimbabwe operation is expected to report a slower growth in volumes to a single digit from a double digit growth in the prior year.

PPC said it experienced operational challenges in Zimbabwe in the third quarter due to monetary and fiscal policy changes. Prices were however aligned to the growth in inflation.

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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