South Africa’s PPC full-year profit doubles, lifted by Zimbabwe

JOHANNESBURG (Reuters) – South African cement producer PPC reported a more than two-fold jump in annual earnings on Monday, boosted by a strong performance in its African operations, including Zimbabwe.

The company has pushed deeper into the rest of Africa as profit has slumped in its domestic market, building plants in Rwanda, Ethiopia, Zimbabwe and Democratic Republic of Congo.

South Africa’s leading cement group said its market share in Zimbabwe had grown to 65 percent from 56 percent.

“We put a plant in Harare, as we never had operations there before,” PPC group Chief Financial Officer Tryphosa Ramano said during a results presentation.

Headline earnings per share for the year ended in March surged to 15 cents from 7 cents a year earlier. Headline EPS is the main profit measure in South Africa that strips out certain one-off items.

However, group core profit, or EBITDA (earnings before interest, tax, amortisation and depreciation), fell 9 percent to 1.9 billion rand ($139 million) due to costs such as the ramp-up of the Congo plant and restructuring costs.

The shares dropped as much as 7 percent after the results – due to what one trader said was market disappointment that restructuring costs were persisting for longer than expected – but later recovered to be just marginally lower.

“The market thought the restructuring would have been completed by now. The construction sector is also not doing too well as a whole,” the trader said.

Revenue at PPC’s Zimbabwe operations grew by 34 percent as volumes increased by more than 45 percent, while its revenue from Rwanda rose 10 percent and volumes by 20 percent, the company said.

Zimbabwe is the biggest contributor to group revenue and EBITDA after southern Africa, which includes South Africa and Botswana.

Business sentiment in Zimbabwe improved after President Emmerson Mnangagwa took over from Robert Mugabe in November last year following a coup.

Presidential elections are due on July 30, and Zimbabwe hopes that a successful election could help unlock investment.

“Instead of people putting money into their bank account, people are building. There is a boom in terms of building,” said Ramano.

“The government has announced that they are bringing Chinese investment into the country, which will improve the infrastructure. They had a backlog on infrastructure.”

PPC is working on repairing roads and expanding Zimbabwe’s airport, Ramano added.

Total cement sale volumes increased 6 percent to 5.9 million tonnes, while group revenue rose 7 percent to 10.3 billion rand.

($1 = 13.6419 rand)

Editing by James Macharia and Adrian Croft

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