PPC seeks to invest more in Zimbabwe

PPC seeks to invest more in Zimbabwe
 President Emmerson Mnangagwa

President Emmerson Mnangagwa

SOUTH Africa’s largest cement and lime manufacturer, PPC, is eyeing more investments in Zimbabwe following the political transition in the country.
President Emmerson Mnangagwa took power through a military takeover and popular protests that ousted long time ruler Robert Mugabe last month.
Many are expecting the 75-year-old leader to implement policies that will halt the country’s economic decline and inject fresh impetus into the ailing manufacturing industry, agriculture and mining sectors.
PPC chief financial officer Tryphosa Ramano said despite the current situation, there are substantial opportunities, thanks to Mnangagwa’s broad vision for restoring economic and financial stability.
“This is the most opportune time for the South African business people to invest in Zimbabwe. One does not have to wait for this giant to wake up completely, as it may be difficult to find opportunities when the economy has completely recovered,” he said.
PPC, which has invested more than $120 million in different projects in Zimbabwe since 2009, is looking forward to do more in the near future.
“With the latest political events providing a promise of things to come, PPC is looking to the future of Zimbabwe, to develop infrastructure and help boost the growth of other economic sectors,” he said.
“On their part, President Mnangagwa and his team should lay out attractive measures to lure foreign investment into the country. Improvements in the people’s living conditions would restore Zimbabwe’s economic health, energise investment and build a solid foundation for efficiency and competitiveness,” Ramano added.
The cement manufacturer recently reported a 36 percent rise in first-half earnings, supported by a strong performance in Zimbabwe and Rwanda.
Group revenue edged up one percent to R5,188 billion from R156 million in the comparable period a year ago, while Earnings before interest, tax, depreciation and amortization (EBITDA) advanced four percent to R1,2 billion.
Volumes sold increased two percent to around three metric tonnes, while net profit attributable to PPC shareholders increased 188 percent to R294 million.
While profits slumped in the domestic market, there was an improved return in other African markets. In addition, PPC increased its cement capacity by 33 percent in the year ending March 31, 2017 following the commissioning of its Zimbabwe mill and projects in the Democratic Republic of Congo (DRC) and Ethiopia.
Revenue in southern Africa cement, which includes Botswana, slipped but realised higher selling prices of two percent.
PPC increased prices in February and August 2017. Volumes fell by 25 percent in this segment, but with two less trading days.
The lower volumes inland were offset by marginal growth along the coast. Imports remain at similar levels to half year last year. EBITDA was stable at around 25,6 percent.
In Rwanda and Zimbabwe volume growth supported a revenue increase of nine percent at a time when selling prices have been stable. EBITDA expanded by a robust 25 percent to R422 million, with EBITDA margins expanding from 30 to 34 percent.
Rwanda continued to deliver healthy volume growth, with plants running at a capacity utilisation rate of over 65 percent and sales expanding by more than 30 percent year on year.
The company also benefitted from improved market penetration as it launched its bulk solution in August 2017 to service the construction and construction product markets resulting in improved market penetration.
PPC Zimbabwe grew volumes by more than 25 percent compared to last year, achieving new sales records in the process. In the north of the country, the volume growth was backed by the commissioning of the Harare mill, while average sale prices rose four percent in United States dollar terms year on year.
The company, which has effectively rejected a conditional partial offer from domestic rival AfriSam Group and Canada’s Fairfax Group for the company ― stating that it undervalued the company, said demand is being driven by housing and asset investments.
The cement producer completed its new plants in the DRC and Ethiopia and the works are in the process of being tested and commissioned by the end of the current financial year. During the period limited production was sold into the market.

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