PPC expects earnings to rise as Africa business grows

JSE-listed construction materials company PPC, which is currently the takeover target of LafargeHolcim and AfriSam, on Tuesday reported that it expects an uptick in its earnings before interest, taxes, depreciation and amortisation (Ebitda) of between 3% and 6% for the half-year ending September 30.

Ebitda had, however, been negatively impacted on by costs related to corporate action, legal costs and exchange rate fluctuations. Excluding these impacts, Ebitda would have risen by a further 5% to 10%.

Meanwhile, net profit attributable to PPC shareholders is expected to increase by between 180% and 200%.

PPC further reported that its group net debt levels have remained in line with that reported in September, while the group remained adequately capitalised to meet its debt repayment obligations.

Debt restructuring negotiations with its funders, relating to South African debt and the DRC funding agreements are progressing well. The group’s ability to generate strong cash flows has also improved, evidenced by cash and cash equivalents rising by between 50% and 60% on the prior comparable period.

Basic earnings a share are expected to rise by between 45% and 60%, or between 19c and 21c, while headline earnings a share are expected to rise by between 30% and 40%, or 18c to 20c higher for the six months under review.

The company attributed the expected growth to the rest of Africa cement business segment boosting Ebitda growth, owing to robust growth in Rwanda and Zimbabwe, paired with a significant reduction in finance costs mainly due to recapitalisation and one-off liquidity and guarantee facility agreement fees incurred in the previous reporting period.

PPC will release its interim results on November 23.