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PPC sets survival strategies

12 February 2019

PPC South Africa says its
Zimbabwean unit will increase exports to neighbouring countries to weather the
impact of inflation and liquidity constraints on the business.

The regional cement maker said
other liquidity management and cash preservation measures will include the
share buy-back of PPC shares listed on the Zimbabwe Stock Exchange through
subsidiary PPC Zimbabwe and continuing clinker imports from South Africa.

PPC volumes increased by low
single digits at its Zimbabwean operation compared to the prior year for the
same period, due to operational challenges experienced in the third quarter of
the financial year.

“Liquidity management and cash
preservation measures include focus on local procurement, with 90% of input costs
sourced locally and increasing exports to neighbouring countries,” the group
said in its trading update for the nine months to December 2018.

PPC said pricing has been aligned
with local inflationary increases.

The group’s pricing is to hedge
against rising inflation in the wake of runaway United States dollar (USD)
parallel market rates and the Reserve Bank’s inability to meet the cement
maker’s foreign currency requirements.

“The impact of fuel increases and
cost of living increases afforded to PPC Zimbabwe employees is expected to
impact earnings before interest, tax, depreciation and amortisation (EBITDA)
margins by one to two percent,” PPC said.

The firm said cost saving
measures will ensure that EBITDA margins remain within previously guided

PPC said despite the challenging
trading environment in the country, it remains positive about its operational
strength and customer support for its brand.

Recently, PPC said its Zimbabwe
business has invested its dividend in government bonds, amid indications the
company is failing to repatriate about $60 million in dividends as the firm has
not been spared from the effects of the prevailing foreign currency shortages.

PPC is the largest cement producer in Zimbabwe, with total capacity of 1,4 million tonnes from its plants in Bulawayo, Colleen Bawn in Gwanda, and at its new $82 million Harare factory.https://www.zimbabwesituation.com/news/ppc-sets-survival-strategies/?PageSpeed=noscript

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