more Quotes
Connect with us

Business

PPC’s Zimbabwe business flourishes while South African, Botswana businesses flounder – The Zimbabwe Mail


Spread the love

Revenue growth in cement producer PPC’s South Africa and Botswana cement businesses was driven by price increases during the ten months ended January 31, positively offsetting the declining sales volumes experienced in the six months to September 30, 2023.

In an operational update issued on March 27, PPC said its overall group revenue increased by 27.6% for the ten-month period, although this was driven mainly by continued strong growth in its Zimbabwe operations relative to the low base in the comparable period in 2022.

The Zimbabwe operations achieved 22.1% year-on-year growth in revenue for the ten months under review.

PPC reported that its earnings before interest, taxes, depreciation and amortisation (Ebitda) margins had improved from 9.9% to 13.6% year-on-year.

However, this was lower than the half-year Ebitda margin of 15.3%. The company attributed this decrease to lower South Africa cement margins, a weak performance in the materials business, one-off costs at a group level, as well as slightly lower Ebitda margins in the Zimbabwean operations.

Capital expenditure (capex) for the group remains behind the guidance of R600-million for the full financial year, mainly owing to the delay of PPC’s fly ash project in Zimbabwe.

The company blamed this on a timing issue owing to a delay in accessing the power plant to complete the plant design and commercial contract. This is now expected to begin early in the 2025 financial year as opposed to the 2024 financial year, thereby delaying the benefits of this expansion project for about one year.

The South African and Botswana free cash flow, being net cash inflow before financing activities and excluding dividends from Zimbabwe, increased to R364-million in the current period from R242-million in the comparable period. The share repurchase programme reached the R200-million approved level during the first half of March.

Following the receipt of the proceeds from the disposal of Rwandan cement business Cimerwa, PPC’s South Africa and Botswana businesses turned cash positive, resulting in a net cash position of R280-million as at January 31.

PPC sold its 51% shareholding in Cimerwa on January 25 for a total selling price of $42.5-million. PPC received the full selling price and paid capital gains tax in Rwanda of $474 000 in February. It is expected that no further capital gains taxes will be payable in South Africa.

The approval by the Common Market for Eastern and Southern Africa Competition Commission, which was not required before the implementation of the transaction, is still expected to be received within 120 days of the effective date.

The Zimbabwe business continues to remain debt free, holding R95-million in unencumbered cash at the end of January. The group’s targeted gross leverage of 1.3 to 1.5 times the South Africa and Botswana operations’ Ebitda (including dividends from Zimbabwe) remains unchanged.

In the period under review, PPC reports that its cement sales volumes in South Africa and Botswana decreased by 4% year-on-year. The year-on-year decline for the first half of the year up to September 30 was 5%.

Sales volumes in the coastal region experienced a sharper decline than in the inland region, mainly owing to a weaker retail market and a lack of infrastructure projects in the area.

Price increases implemented in July last year and in January offset the decline in volumes with the South Africa and Botswana cement business, increasing revenue by 6% in the current period compared to the 5% increase recorded at the half-year point.

Ebitda margins increased slightly from 10.7% to 11.4% over last year’s ten-month mark but are below the 12.6% reported at the half-year. However, PPC noted that the performance in the South Africa and Botswana cement market has deteriorated since the end of January.

PPC’s materials business comprises three distinctly different businesses, focusing on readymix concrete, aggregates and fly ash, respectively. The readymix concrete business was impacted by a lack of construction projects in the regions in which it operates, which negatively impacted volumes.

The aggregates business realised lower volumes in the depressed localised market it serves from its two quarries. However, the fly ash business continued to benefit from increased volumes owing to its diverse customer base.

The materials business saw a notable improvement in negative Ebitda, shifting from a negative R60-million a year ago to R7-million in the current period. PPC said this change was significant considering the positive R14-million Ebitda contribution at the half-year mark.

Despite price increases, the negative Ebitda was attributed to the substantial decrease in volumes across the readymix concrete and aggregates businesses, which declined even further compared to the half-year. However, the fly ash business Ebitda continued to show strong growth in the current period.

Meanwhile, cement volumes showed strong growth, increasing by 41% in the ten months to January 31, albeit slightly lower than the half-year growth of 44%, owing to the impact of the stronger base in the comparable prior period.

Growth continues to be as strong as a result of both residential construction and government-funded infrastructure projects, constrained imports and a low base a year ago owing to the extended shutdown.

Ebitda margins were 22% in the current period, reflecting a year-on-year improvement of 18% but lower than the 25% improvement recorded at the half-year point. This was mainly owing to the high cost of clinker imports as local production could not meet demand levels.

PPC Zimbabwe declared dividends of $4-million in July last year and then $7-million in the following November. The next dividend declaration is expected in July.

PPC says the short-term outlook for the South Africa and Botswana markets remains subdued, although the short-term outlook for PPC Zimbabwe remains positive.

The company says the reorganised and strengthened executive committee (exco) team announced on January 18 now has the right blend of global and local cement industry experience, institutional and technical knowledge, and a renewed energy to drive the needed improvements at the company’s operational level.

The exco is conducting a comprehensive review to ensure PPC is agile, well-managed and resilient in what PPC said is a challenging South African macroeconomic context.

The key focus areas include the optimisation of structure, processes and controls; the refocusing of the business on contribution margin through an assessment of the South African businesses commercial footprint; and the reduction in fixed operational and overhead costs.

These will require improvements to the internal management reporting systems to better support PPC’s commercial and operational decision-making.

With this in mind, the board has targeted achieving a sustainable return on capital for its South Africa and Botswana business in the medium term.

PPC adds that it intends to increase engagement with regulators and other key market stakeholders to further develop a more sustainable cement industry in South Africa through creating a level playing field among local, regional and international competitors on key issues such as imported cement and low-quality standard products.

With the South African gross debt to Ebitda ratio expected to be well below the stated optimal level, PPC notes that it intends to continue to return cash to shareholders through dividends or the implementation of a share repurchase programme in the absence of any value-enhancing corporate activity.

Source: Engineering News

Continue Reading

Business

De-dollarization: Zimbabwe introduces gold-backed currency – Business Insider

Zimbabwe just introduced a new gold-backed currency in an attempt to fight inflation and wean off the US dollar

John Mushayavanhu, Governor of the Reserve Bank of Zimbabwe, presents the new national currency Zimbabwe Gold, or ZiG.

Angle down icon
An icon in the shape of an angle pointing down.

John Mushayavanhu, Governor of the Reserve Bank of Zimbabwe, presents the new national currency Zimbabwe Gold, or ZiG.


Columbus Mavhunga/picture alliance/Getty Images




p” class=”inline-offer pre-churn-offer”>


  • Zimbabwe’s central bank has introduced a new gold-backed currency, ZiG, to combat high inflation.
  • This is Zimbabwe’s sixth attempt at a new currency since 2008.
  • The African nation is aiming to phase out its multi-currency system where the US dollar is dominant.

Advertisement

Inflation-hit Zimbabwe has a new currency — again.

Last week, the country’s central bank introduced a new gold-backed currency called Zimbabwe Gold, or ZiG, in an attempt to tame price gains that reached a seven-month high of 55% in March.

It’s the country’s sixth attempt at creating a new currency since 2008. The Zimbabwe dollar — the currency the country most recently used — has tanked 80% this year alone.

There’s been so little confidence in Zimbabwe’s local currency that about 80% of the country’s population transacts in the US dollar.

Advertisement

On Thursday, Zimbabwe’s central bank governor, John Mushayavanhu, said the country has real gold and mineral assets to back up the new ZiG currency. Mushayavanhu said Zimbabwe’s central bank holds 2.1 tons of gold and other assets, including diamonds, that are equivalent to 0.4 tons of gold, according to Voice of America.

The ZiG started trading on Monday at an exchange rate of 13.56 to the dollar set by the central bank.

Reservations about Zimbabwe’s new currency

There are reservations about the new ZiG currency.

In a note on Sunday, Hasnain Malik of research firm Tellimer wrote that Zimbabwe’s economy needs fundamental fixes like reductions in fiscal deficit and external debt, not a new currency.

Advertisement

However, moving to the new ZiG currency could solve at least one problem, for a start: a shortage of US coins.

Zimbabwe’s shortage of US coins has resulted in people receiving their change in sweets, chocolates, and pens, according to the BBC.

Zimbabwe has been trying to wean itself off the US dollar

If successful, ZiG may be able to replace some — if not all — transactions that currently take place with the US dollar.

Zimbabwe has already applied for membership to the BRICS’s New Development Bank, which is seeking to expand the use of local currency loans.

Advertisement

Zimbabwe’s central bank said in its 2024 monetary policy statement, released last week, that it will be preparing a “structured roadmap to gradually promote the increased use of the new local currency.”

For a start, it’s making it compulsory for companies to settle at least half of their quarterly taxes in ZiG, according to the central bank report.

The African country has been trying to wean itself off the US dollar for years, with little success. The country has seen runaway inflation due to years of economic mismanagement under its former leader, Robert Mugabe.

At one point in 2008, annual inflation reached 500 billion percent, according to the International Monetary Fund.

Advertisement

Zimbabwe’s government banned the use of foreign currencies as legal tender in 2019. The country’s former central bank governor said at the time that the country’s economy was “at the mercy of US dollar pricing, which has been a root cause of inflation,” the BBC reported.

The country was forced, however, to reverse the ban in June 2022 to rein in inflation.

The government had initially planned to end the multi-currency system in 2025, but extended it until 2030.


Advertisement

Continue Reading

Business

De-dollarization: Zimbabwe introduces gold-backed currency – Business Insider

Zimbabwe just introduced a new gold-backed currency in an attempt to fight inflation and wean off the US dollar

John Mushayavanhu, Governor of the Reserve Bank of Zimbabwe, presents the new national currency Zimbabwe Gold, or ZiG.

Angle down icon
An icon in the shape of an angle pointing down.

John Mushayavanhu, Governor of the Reserve Bank of Zimbabwe, presents the new national currency Zimbabwe Gold, or ZiG.


Columbus Mavhunga/picture alliance/Getty Images




p” class=”inline-offer pre-churn-offer”>


  • Zimbabwe’s central bank has introduced a new gold-backed currency, ZiG, to combat high inflation.
  • This is Zimbabwe’s sixth attempt at a new currency since 2008.
  • The African nation is aiming to phase out its multi-currency system where the US dollar is dominant.

Advertisement

Inflation-hit Zimbabwe has a new currency — again.

Last week, the country’s central bank introduced a new gold-backed currency called Zimbabwe Gold, or ZiG, in an attempt to tame price gains that reached a seven-month high of 55% in March.

It’s the country’s sixth attempt at creating a new currency since 2008. The Zimbabwe dollar — the currency the country most recently used — has tanked 80% this year alone.

There’s been so little confidence in Zimbabwe’s local currency that about 80% of the country’s population transacts in the US dollar.

Advertisement

On Thursday, Zimbabwe’s central bank governor, John Mushayavanhu, said the country has real gold and mineral assets to back up the new ZiG currency. Mushayavanhu said Zimbabwe’s central bank holds 2.1 tons of gold and other assets, including diamonds, that are equivalent to 0.4 tons of gold, according to Voice of America.

The ZiG started trading on Monday at an exchange rate of 13.56 to the dollar set by the central bank.

Reservations about Zimbabwe’s new currency

There are reservations about the new ZiG currency.

In a note on Sunday, Hasnain Malik of research firm Tellimer wrote that Zimbabwe’s economy needs fundamental fixes like reductions in fiscal deficit and external debt, not a new currency.

Advertisement

However, moving to the new ZiG currency could solve at least one problem, for a start: a shortage of US coins.

Zimbabwe’s shortage of US coins has resulted in people receiving their change in sweets, chocolates, and pens, according to the BBC.

Zimbabwe has been trying to wean itself off the US dollar

If successful, ZiG may be able to replace some — if not all — transactions that currently take place with the US dollar.

Zimbabwe has already applied for membership to the BRICS’s New Development Bank, which is seeking to expand the use of local currency loans.

Advertisement

Zimbabwe’s central bank said in its 2024 monetary policy statement, released last week, that it will be preparing a “structured roadmap to gradually promote the increased use of the new local currency.”

For a start, it’s making it compulsory for companies to settle at least half of their quarterly taxes in ZiG, according to the central bank report.

The African country has been trying to wean itself off the US dollar for years, with little success. The country has seen runaway inflation due to years of economic mismanagement under its former leader, Robert Mugabe.

At one point in 2008, annual inflation reached 500 billion percent, according to the International Monetary Fund.

Advertisement

Zimbabwe’s government banned the use of foreign currencies as legal tender in 2019. The country’s former central bank governor said at the time that the country’s economy was “at the mercy of US dollar pricing, which has been a root cause of inflation,” the BBC reported.

The country was forced, however, to reverse the ban in June 2022 to rein in inflation.

The government had initially planned to end the multi-currency system in 2025, but extended it until 2030.

Advertisement

Continue Reading

Business

Zimbabwe’s new ZiG currency starts trading amid big doubts | Business – News24

(Mark Rubens/Getty Images)

(Mark Rubens/Getty Images)


Zimbabwe’s new gold-backed currency started trading on Monday amid doubts that the country’s third such re-launch in a decade will have any more success in ending repeated, crippling bouts of high inflation.

The Zimbabwe Gold (ZiG) was announced on Friday by the central bank with an initial rate of 13.56 to $1, replacing the Real Time Gross Settlement Dollar (RTGS), which had lost about 80% of its value this year and had been trading at 28,720 to $1 before the change.

Bank balances were transferred into the new currency over the weekend while their customers will have 21 days to do so, and the new banknotes will enter circulation at the end of this month, according to the Reserve Bank of Zimbabwe.

The RTGS, also known as the Zimdollar, was launched in 2019 after a decade of dollarisation, which included so-called bond coins and bond notes, notionally pegged to the U.S. dollar and introduced in 2014 and 2016 respectively.

However, the Zimdollar struggled to gain trust and this year’s precipitous slide pushed annual inflation above 55% in March, raising fears of a return to the 2007-2009 era of hyperinflation under former president Robert Mugabe.

“There was dire need for drastic change in the Zimbabwean monetary system,” Jacques Nel at research firm Oxford Economics said in a note to clients.

The central bank statement on Friday correctly identified the most pressing problems, said Nel. “A lack of credibility in both the domestic currency and the framework that governed it – but it is that same lack of credibility that casts doubt over the effectiveness of these new measures,” he added.

Commercial banks were using the new official exchange rate on Monday, according to Reuters enquiries. It was not immediately clear whether the currency, which the central bank described as “structured” and “anchored by a composite basket of foreign currency and precious metals (mainly gold) held as reserves”, would be able to retain this value.

Nor was it given that companies and citizens would accept it as a form of payment and a store of value. Some 80% to 85% of transactions are currently carried out in foreign currencies, according to the central bank.

“Zimbabwe has an insufficient $285 million of hard currency and gold reserves,” Hasnain Malaik of research firm Tellimer said in a note. “To fix the economy, Zimbabwe needs to address these root causes of its problems.”

These problems include central bank funding of government, unsustainable fiscal deficits, debt arrears and Western sanctions, and Malaik said it was not clear whether any would be addressed under the current ruling ZANU-PF party.

Continue Reading

Trending

Copyright © 2021 ZimFocus.

www.1africafocus.com

www.zimfocus.co.zw

www.classifieds.com/

One Zimbabwe Classifieds | ZimMarket

www.classifiedszim.com

www.1zimbabweclassifieds.co.zw

www.1southafricaclassifieds.com

www.1africaclassifieds.com

www.1usaclassifieds.com

www.computertraining.co.zw/

www.1itonlinetraining.com/

www.bbs-bitsbytesandstem.com/

Zimbabwe Market Classifieds | ZimMarket

1 Zimbabwe Market Classifieds | ZimMarket

www.1zimlegends.com

Linking Buyers To Sellers Is Our Business Tradition