REGIONAL cement manufacturer, Pretoria Portland Cement (PPC), says sales volumes at its Zimbabwean entity increased by over 40% from last year, despite the harsh trading environment.
BY MTHANDAZO NYONI
In its integrated report for the year ended March 31, 2018, PPC said revenue grew by 34% to R1 813 million (approximately $135 822.54) compared to R1 352 million ($101 286,31) achieved in the same period last year, supported by volumes which increased by over 40% from last year.
In Zimbabwe, PPC operates three plants, including the new $82 million plant in Harare, which was commissioned last year and produces 700 000 tonnes of cement per annum. The other two plants are in Bulawayo and Colleen Bawn near Gwanda, with combined annual production of 700 000 tonnes, bringing the total annual production of the company to 1,4 million tonnnes of cement per year.
“The Zimbabwean economy continued to face severe liquidity constraints, with very low foreign currency reserves, impeding payments for offshore goods and services. Despite the difficult trading environment, PPC Zimbabwe grew volumes over 40% from last year, setting new sales records,” the group 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. Route-to-market initiatives were extremely effective in supporting the ramp-up of the Harare mill.”
In the period under review, PPC said cement imports remained low while exports improved slightly after a strategic initiative to generate foreign currency to support operations.
“To mitigate against liquidity risks, PPC Zimbabwe implemented initiatives to accelerate the development and support of local service providers, and an export strategy to generate the required foreign exchange,” PPC added.
However, the group said economic performance might be affected by the political situation caused by circumstances around the July 30 elections.
Zimbabwe held its harmonised elections on July 30 which were controversially won by Zanu PF and its leader Emmerson Mnangagwa. The election results have, however, been disputed by the opposition MDC Alliance leader, Nelson Chamisa who is this week expected to file a court challenge claiming massive electoral rigging.
“With the government’s support to improve capacity utilisation of the manufacturing sector, PPC Zimbabwe expects to grow volumes into neighbouring countries in 2019.”
PPC said the national cement demand remained well below production capacity and regional cement prices were significantly lower than those in Zimbabwe.
PPC also said the government had raised concerns about high cement prices as it pushed its low-cost housing agenda.
“These factors will increase competition and pressure to reduce cement prices, despite an inflationary environment. To mitigate this and the foreign currency liquidity shortage, we will continue to increase localised procurement and grow export volumes in neighbouring countries.”
“Operational efficiencies and reducing production costs remain a key focus in the short and medium term.”
Earnings before interest, tax, depreciation and amortisation grew 31% to R572 million (2017: R438 million), with margins maintained at 32%.
To mitigate current liquidity constraints, PPC said it significantly reduced its forex requirements by settling a power tariff account for its clinker-producing facility in-country.