Strong SA, Zimbabwe sales boost PPC results

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By Zimbabwe Investor on May 17, 2013. No Comments

PPCAn improvement in South African and Zimbabwean cement sales helped shore up PPC’s results in the interim period ended March, South Africa’s premier cement maker said on Thursday.

But this trend was tempered by weakness in cement sales in Botswana, labour problems at Eskom’s new Medupi power station, cheaper imports from Pakistan and lower demand in the group’s lime and aggregates divisions. PPC’s share price dropped 5.44% to close at R32.85 on Thursday.

Revenue fell 16% in the lime division as a result of a 20% decline in sales volumes.

This came after a fire halted production at ArcelorMittal SA’s largest steel plant in Vanderbijlpark for two months.

PPC’s earnings per share ended 21% lower at 62c from 78c per share last year.

“PPC sells metallurgical grade lime mainly to the steel and alloy industries,” Ross Heyns, equity analyst at Kagiso Asset Management, said on Thursday. “As a result, the fire at Vanderbijlpark and the generally depressed condition of the local steel industry affected the lime division’s sales volumes and profitability,” he said.

South African cement sales volumes increased 6% and average selling prices were up by 4%, with volume growth coming from both inland markets and the Western Cape. This mainly came as a result of private sector investment in residential and commercial space, new CEO Ketso Gordhan said on Thursday. “And a sprinkling of (state-funded) infrastructure work that is emerging,” he said.

“Net profits were down 20% because of IFRS 2 (international financial reporting standards) charges and Zimbabwe’s indigenisation charges.” PPC said when IFRS 2 relating to local economic empowerment charges and Zimbabwe’ indigenisation costs were excluded, normalised earnings rose to 83c per share.

While the group resolved technical issues at its Dwaalboom plant in Limpopo, costs of sales of R2.6bn were 9% higher due to electricity and depreciation costs. However, cash generated from operations rose to about R1bn from R889m, with normalised earnings per share rising 4%.

Cement sales volumes rose 6%, mainly due to growth in Zimbabwe and better cement volumes. This helped group revenue rise 8% to R3.8bn, along with improved cement pricing and the favourable devaluation of the rand against the dollar and Botswana pula.

Bloomberg has reported PPC plans a $200m plant in Democratic Republic of Congo. – BDLive