Tinashe Makichi
Zimbabwe Stock Exchange listed, PPC Zimbabwe is bullish on the country’s future and is maintaining it’s pricing in line with inflationary increases in the economy.
The company is also looking at increasing exports to neighbouring countries, continuing with clinker imports from South Africa and shares purchases of PPC on the Zimbabwe Stock Exchange.
PPC Zimbabwe chief executive Kelibone Masiyane said the company remains bullish and has enough capabilities to supply infrastructural projects.
“We’ve got plenty cement. Our silos are full. The capability to supply all infrastructural projects is there. We’ve got to reserve our hard-earned foreign currency and buy local cement,” said Masiyane.
In its half year results to September 30, 2018, PPC Zimbabwe’s revenue grew 31 percent to R1 077 million compared to R820 million in the same period on the back of strong volume growth of 28 percent.
Earnings before interest, taxation, deductions and amortisation grew 42 percent to R352 million from R248 million, with corresponding margins improving from 30 percent to 33 percent.
Local companies are struggling to access foreign currency as demand has outstripped supply. Last month, Reserve Bank of Zimbabwe governor John Mangudya established an inter-bank foreign exchange market to formalise the trading of Real Time Gross Settlement (RTGS) balances and bond notes with US$ and other currencies.
PPC Limited viewed the introduction of a formalised floating foreign exchange market as a positive development towards curbing the high inflation and excessive premiums created by the parallel exchange rates.
The cement company said the exchange market should result in a more efficient allocation of foreign currency, removing the distortions that were impacting the market, and facilitate the repatriation of cash in the medium to long-term.
On the implications to the balance sheet and liquidity of the company, PCC said it reported a cash balance of US$63 million at the end of September 2018 which was reduced to US$60 million by a debt repayment at the end of February 2019.
The initial rate of 2,5 RTGS $:1 US$ applies only to a portion of the US$60 million cash balance, amounting to US$30 million to US$35 million. The remaining balance including US$16 million in dividends and US$5 million rights offer proceeds, qualifies as legacy debt due to PPC South Africa which is awaiting repatriation.
Looking ahead, the company said it maintains a good relationship with the Zimbabwean monetary authorities and will persist in engaging the regulators and monitoring developments.
“The business continues to implement strategies to protect its financial position and utilise regulatory channels to repatriate fundswhere possible,” said the cement giant.
PPC Limited noted that acute forex shortages as well as liquidity constraints continue to hamper economic activity and PPC Zimbabwe was operationally self-sufficient and continues to drive local procurement and exports to reduce forex requirements.
“Furthermore, the company is continually looking to capitalise on sustainable acquisition opportunities in the value chain in the country.
“The PPC Zimbabwe business has remained resilient despite the challenges experienced in the Zimbabwean economy in the last 12 months. The company has kept its pricing in line with inflationary increases in the economy and demand remains strong,” said PPC Limited
in a statement.
