BY MTHANDAZO NYONI

REGIONAL cement maker Pretoria Portland Cement (PPC) says demand for cement in Zimbabwe, where it has a unit, is very strong despite the COVID-19 pandemic and its suspension from trading on the local bourse.

In its latest operational update, PPC said its cement operations ramped up in May post the COVID-19 restrictions imposed at the end of March across most of the jurisdictions in which the group operates.

“The total cement volumes sold by the international subsidiaries also showed double digit growth comparing July 2020 with July 2019. The demand is especially strong in Zimbabwe and Rwanda and the growth of sales volumes during July has been positive in the Democratic Republic of Congo as well,” the update read.

“The increased sales volumes and the effect of the cost reduction and cash preservation measures have resulted in cash flows for the last months showing a positive trajectory.”

PPC said the double digit year-on-year growth of cement volumes in South Africa during June continued in July as cement sales volumes in that country once again showed double digit growth compared to July 2019. This was achieved on the back of a strong reduction in imports.

“Also, the resumption of construction activities and the temporary effect of high activity in construction projects to catch up on the delivery of these projects have had a positive impact,” it said.

PPC noted that as some of these positives might be temporary given the economic outlook, the company continued with the implementation of measures to reduce costs and increase cash generation from its operations.

The company said group revenue for the year ended March 31, 2020 was expected to decrease by less than 5% compared to the prior year of R10,409 billion.

It said earnings before interest, tax, depreciation and amortisation, were expected to decrease by between 15% and 20% compared to the prior year, while basic earnings per share were expected to reflect a loss per share of between 110 and 130 cents, compared with the restated nine cents per share achieved for the prior comparable period.

Headline earnings per share are expected to be between 25 cents and 30 cents per share (reflecting a difference of between 8,7% and 30,4%) compared with the restated 23 cents per share achieved for the prior comparable period ended March 31, 2019.

“The difference between the basic earnings per share and headline earnings per share relates to the impairment of property, plant and equipment in South Africa Cement, PPC Barnet DRC and Ready mix, as well as impairment of certain intangible assets and goodwill,” PPC said.

These impairment considerations were affected by the economic impact of the COVID-19 pandemic, it said.

PPC said the financial consequences of the closure of the group’s plants during lockdown periods of varying lengths depending on the jurisdiction, and the uncertain economic outlook and recovery periods resulting from the economic impact of COVID-19 had been factored into the cashflow forecasts utilised in impairment assessment of the cash generating units of the group.

Included in headline earnings per share is a net monetary gain of between R625 million and R675 million relating to the hyperinflation accounting in Zimbabwe, it said.

PPC, together with Old Mutual and Seed Co International, were suspended from trading on the Zimbabwe Stock Exchange by the government after being accused of causing perpetual currency depreciation through speculative bets.

Dual-listed counters particularly Old Mutual, were targeted as having a significant impact on the psychological benchmarking of the local currency on the Old Mutual Implied Rate.
Consequently, the three dual-listed companies are earmarked to trade on the newly-created Victoria Falls Stock Exchange.

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