- Zimbabwe’s inflation rate stood at 679,39% at the end of the PPC financial year
- Cement Sales volumes were down by 15% to 20%
- Heightened prices depressed demand
Harare – Dual listed, regional cement manufacturing company Pretoria Portland Cement (PPC) Limited has cited the hyperinflation in Zimbabwe as one of the major reasons for the decline experienced in the amount of cash generated during the financial year ended 31 March 2020.
PPC has 11 cement factories in South Africa, Botswana, DRC, Ethiopia, Rwanda and Zimbabwe.
From all their operations in the year ended 31 March 2020 they managed to generate R463 million down 180% from the R1.3 Billion generated in the prior year.
The decline in cash from operations is partly accredited to the shortage of foreign currency and hyperinflation in Zimbabwe which stood at 679,39% (year-on-year) at the end of the year in review, which depressed demand and negatively impacted cement volumes by 15% to 20% while the market contracting by the same percentage.
The overall revenue from the operations in Zimbabwe grew by 29% to R1.9 billion, supported by higher realised prices, and EBITDA grew by 53% to R707 million and in the last three months from July to September, sales volumes in PPC Zimbabwe have grew by 35% to 40% on the back of a much more favourable operating environment resulting from more stable exchange rates.
Besides the hyperinflation in Zimbabwe, PPC cash generation was also affected by the decline in the earnings before interest, tax, depreciation, and amortization (EBITDA) across the board which stood at R1.6 billion from R1.9 billion in the prior year with South African operations taking the hardest hit, delivering EBITDA of R613 million, 36% lower than in the prior year.
Group revenue at R10.2 billion was slightly lower than that of the prior year which closed at R10.4 billion.
Going forward, PPC CFO, Ronel van Dijk said that cash generation and preservation was a big goal for the organisation in FY2021 and that PPC had already implemented strategies that were already yielding results.
“We are committed to improve cost competitiveness and cash preservation is a major focus for FY21. On the back of the recovery in sales and the various cost and cash preservation measures already implemented, cash flows for the last few months have shown a positive trajectory…” He said.
Equity Axis News.