• PPC projects a significant decline in EPS and HEPS against last year.
• Trading conditions remained difficult in South Africa, PPC's largest market, with cement volumes down but selling prices up.
• PPC received dividends from its Zimbabwe and Rwandan operations, while reducing debt levels in South Africa.

Harare- PPC Limited released a trading update for the 12 months ending 31 March 2023, projecting a significant decline in earnings per share (EPS) and headline earnings per share (HEPS) compared to the previous year.

The South African cement producer said EPS is expected to be a loss of between 21.5 cents and 22.5 cents per share, compared to earnings of 5 cents per share last year. HEPS is projected to be a loss of 8-10.5 cents per share, an improvement from the 13 cents per share loss last year.

PPC said the lower earnings were primarily due to non-cash tax items, lower profitability in South Africa and Zimbabwe, and only having a 51% stake in its successful Rwandan subsidiary CIMERWA.

Trading conditions remained difficult in South Africa, PPC’s largest market, with cement volumes down 5.8% although selling prices rose 8%. The smaller materials business suffered an EBITDA loss of R65 million. Overall, the South African operations saw a 26% drop in EBITDA to R570 million. However, South African debt fell by 27% to R800 million.

In Zimbabwe, cement volumes fell 16% due to maintenance shutdowns, though revenue declined only 19% as PPC implemented dollar price increases. EBITDA was down 7% to R365 million. PPC received R147 million in dividends from Zimbabwe.

CIMERWA in Rwanda saw cement volumes up 1% and revenue rise 29%, lifting EBITDA 31% higher to R447 million. PPC received R79 million in dividends from CIMERWA.

PPC said it will continue to focus on cash generation and efficiency in Southern Africa. With low debt levels in South Africa, the company intends to prioritize returning cash to shareholders through dividends or share buybacks if no worthy acquisitions emerge.

The trading update shows PPC grappling with weak economic conditions in South Africa and Zimbabwe, though making progress in reducing debt and boosting profitability in Rwanda. The outlook points to a continued challenging environment unless infrastructure spending and growth pick up in PPC’s main markets.

Overall, the trading update indicates a challenging outlook for PPC in the near future unless economic conditions and infrastructure spending improve in South Africa and other key markets in which PPC operates. However, PPC's focus on cost cutting, efficiency measures, and cash generation should help mitigate some of the negative impact in the short term. The company's successful operations in Rwanda provide some bright spot as well as a source of dividends, while lower debt levels in South Africa give PPC more financial flexibility. If infrastructure spending does pick up in PPC's main markets, the company is positioned to benefit through its well-established operations and supply chains. But for now, PPC is likely expecting the difficult trading environment to persist.