PPC Ltd. recently announced its reviewed provisional results for the six month period to 31 March 2016, after the Board approved the change of financial year end from 30 September to 31 March.
Group EBITDA was up 2% to R1,1-billion largely due to improved efficiencies and cost savings which resulted in reduced administration and other operating expenditure. The Profit Improvement Programme (PIP), which aimed to deliver R400-million by 2017, generated R178-million for the period after providing R212-million by September 2015.
Darryll Castle, CEO of PPC.
PPC’s total cement sales volumes for the six-month reporting period were 1% below last year. In South Africa, cement volumes were up by 1% although lower selling prices reduced revenue. While revenue in the lime business declined 12%, aggregates and readymix operations contributed positively to group revenue. CIMERWA, PPC’s new operation in Rwanda, achieved sales volumes of 124 000 tons at the expected EBITDA margin, adding nearly R200-million to group revenue for the reporting period to 31 March 2016.
Group cost of sales were only 2% higher following the inclusion of CIMERWA in Rwanda, with cost increases particularly well managed in the South African and Botswana cement businesses as well as in the lime division. Cost of sales in the South African cement business was down 3%, on a per ton basis, while administration and overhead costs fell 12% for the period.
PPC’s expansion strategy, embarked on in 2010 to extract value from high-growth economies, is progressing well. Projects in the DRC, Zimbabwe and Ethiopia are all over 70% complete and due to be commissioned in the next 12 months with ramp up to the required production capacity to take approximately three years.
Darryll Castle, CEO of PPC, commented: “We are pleased with the cost savings achieved across the business during this period. We have a deliberate approach to navigating the current economic landscape by driving cost efficiencies and leveraging our capabilities to achieve operational excellence.”
“Our strategy to expand into a diverse pan-African player is starting to bear fruit as evidenced by CIMERWA’s positive contribution to group revenue. The three African expansion projects to be commissioned in the next 12 months will provide us with the necessary headroom to cushion us against macroeconomic movements and operational risks including increasing competition.”
To enable PPC to effectively execute its new strategy, a few changes have been made to the group’s operating architecture. PPC Aggregates, Pronto Readymix, Ulula Ash and PPC Lime have been consolidated into a materials business and a new commercial division with a dedicated project management office has been introduced.
The materials business division which is focussed on expanding PPC’s product range and service offering in aggregates, readymix, fly ash, lime and related businesses has made good progress including the imminent acquisition of 3Q Mahuma Concrete, the largest independently owned readymix concrete supplier in southern Africa.
“PPC is fundamentally strong and profitable with a solid operating base. We have a deliberate approach to navigate the current economic landscape by driving cost efficiencies; leveraging our capabilities to achieve operational excellence and completing our sizeable projects.
“With a view to the long term, we are equally deliberate about getting the company future-ready to partner with and enable economies across Africa achieve their growth imperatives,” added Castle.
