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SA's biggest cement producer PPC hiked its prices over the past year - but it wasn't enough to prevent its loss from widening.
On Thursday, the company warned that its headline loss per share from continuing operations will widen to between 7.75c and 8.25c to end March, from 3c in the previous year, it said in a trading update. The group reported a loss of 6c for its half-year to end-September.
Valued at about R3.7 billion on the JSE, PPC generates over half of its revenue through cement sales in SA and Botswana, with Zimbabwe contributing 17%, Rwanda 15% and sales of other materials 12% at its half year.
The group said revenue in SA and Botswana lifted 1.7% in the period, but volumes declined 5.8%, with the coastal region of SA seeing relatively better demand for cement compared to the inland region as it benefited from muted imports given the weaker rand. However, trading conditions in the inland region remained difficult, it said, with this part of the business encompassing SA with the exclusion of the Western and Eastern Capes, and part of the Northern Cape.
Core profit in its South African and Botswana cement and materials businesses fell 26% to R570 million, with the materials business swinging into a loss, and feeling the effects of load shedding. Net debt in this part of the group, however fell to R800 million from about R1 billion.
In Zimbabwe, volumes fell 16% despite robust cement demand from concrete product manufacturers and government-funded infrastructure projects, it said.
This is due to the impact of a planned kiln shutdown for maintenance which took place in the first half of the year, but there were also stoppages due to power interruptions in the second half. PPC Zimbabwe has gradually recovered market share lost over this period and is well positioned to deliver strong volume growth going forward, the group said. But it added that hyperinflationary accounting would have a R195 million non-cash effects on its results, almost quadruple the effect of the prior year.
Rwanda's volumes were up 1%, which along with price increases and a weaker rand helped lift core profit by almost a third to R447 million.
"Despite challenging times in our core South African market, I am pleased that we achieved positive cashflow generation, further reduced our debt and are in a strong financial position to weather the local economic cycle," CEO Roland van Wijnen said in the update.
"Increased demand through an enhanced infrastructure investment program and a stronger economic climate is required to enable us to more effectively utilise the capacity available in our primary market," he said.
"We therefore remain hopeful that the South African government will roll out its infrastructure development plans and protect the local cement market through the introduction of import tariffs to create a level playing field for domestic producers."
