S&P Global Ratings has cut PPC’s rating to one notch above non-investment grade as falling cement demand and stiff competition dampen the prospects of the company’s SA business. “The downgrade follows weaker-than-expected profitability in PPC’s South African business coupled with ongoing macroeconomic and currency regime uncertainty in Zimbabwe,” S&P said on Tuesday.

“As a result, we expect an increase in the group’s debt to ebitda (earnings before interest, tax, depreciation and amortisation), tighter covenant headroom, and potentially also a greater reliance on shorter-term working-capital facilities to meet upcoming debt maturity obligations, if the group is unable to extend its debt maturity schedule,” it said. S&P said that due to declining demand for cement and increased competition in SA, PPC’s debt-reduction prospects in the local market have been dampened. In the nine months ended December, PPC’s Southern African business increased cement prices as much as 2%, while...

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