Regional cement producer Pretoria Portland Cement (PPC) says volumes, including exports, at its Zimbabwean unit have gone down 22 percent in the first half of the year due to liquidity challenges, increased local competition and lower disposable income.
In its reviewed provisional results for the six month period ended 31 March 2016, the South African headquartered company said local selling prices for its cement also went down three percent.
As a result, the unit’s contribution to group revenue decreased four percent.
“EBITDA margins contracted by four percent. Domestic cement demand dropped significantly in the review period after several years of growth. This reflected a poor agricultural season, tighter market liquidity, increased local competition and lower disposable incomes,” the company said.
PPC said weakening regional currencies against the dollar was also attracting imports from neighboring countries into Zimbabwe, despite a number of barriers to entry.
PPC, however, said it was going ahead with its expansion projects in Zimbabwe, with the US$85 million mill in Harare reported at around 70 percent complete as at 31 March 2016.
“Operational readiness activities are under way with staffing, skills transfer, material and equipment plans being implemented against a ramp-up plan. Plant commissioning is expected towards the end of calendar 2016,” PPC said.
PPC’s only cement plant in Zimbabwe, located in Bulawayo, produced around 600 000 tonnes of cement last year while operating at 75 percent of installed capacity.
The group also has a lime clinker plant in Coleen Bawn in Matabeleland South but the bulk of its cement market is in Harare.
Apart from South Africa and Zimbabwe, PPC also has units in Botswana, Ethiopia, Rwanda.
It said during the period group revenue went down 1 percent to R4.5 billion (S$300m).- The Source