PRETORIA Portland Cement (PPC) says sales volumes at its local operation rose by 40 percent in the financial year ended March 31, 2018 compared to the previous year despite the difficult trading environment.
In its integrated report for the financial year under review, the regional cement manufacturer said revenue from the entity rose by 34 percent to R1 813 million compared to R1 352 million recorded during the same period last year.
PPC said volume growth was supported by a strong presence in the north of the country after the successful commissioning of the Harare mill and launch of innovative products.
The company also attributed the growth to route-to-market initiatives which were effective in supporting the ramp-up of the Harare mill.
PPC Zimbabwe comprises a clinker manufacturing operation at Colleen Bawn and two milling plants in Bulawayo and Harare.
PPC chief executive officer Mr Johan Claassen said the growth in volume reflects strong demand and market-share growth in the Harare region.
“A successful harvesting season injected additional disposable income to the economy and boosted building and construction activities, which were all locally supplied due to the import barrier created by the country’s liquidity constraints,” he said.
However, Mr Claassen noted that the prevailing liquidity challenges in the local market could offset the benefit of the good performance as no dividends can be repatriated to the group.
The country continues to face severe liquidity constraints, with very low foreign currency reserves, impeding payments for offshore goods and services.
During the period under review, the company highlighted that there was also an upsurge in construction as citizens converted monetary investments to property amid liquidity constraints.
To mitigate liquidity risks, the regional cement manufacturer said it implemented initiatives to accelerate the development and support of local service providers, and an export strategy to generate the required foreign exchange.
“The leadership change in November 2017, followed by the ‘Zimbabwe is open for business’ message signals improved prospects for the country with revised GDP (Gross Domestic Product) growth for 2018 showing a slight economic recovery,” said PPC.
PPC said national cement demand remains well below production capacity and regional cement prices were significantly lower than those in Zimbabwe.
“The Government has raised concerns about high cement prices as it pushes its low-cost housing agenda.
“These factors will increase competition and pressure to reduce cement prices, despite an inflationary environment,” said the cement manufacturer.
To mitigate the above challenges, PPC said it would continue to increase localised procurement and grow export volumes in neighbouring countries.
- Chronicle
