Southern Africa cement business shows signs of stabilising, PPC says
In a trading update the cement maker said its capital expenditure should be at the lower end of recent guidance
Cement-maker PPC said lower levels of capital expenditure has helped offset lower earnings during the 11 months to end-February, with its Southern African business starting to show signs of stabilisation even as it continues to face price pressures from increasing exports.
The SA coastal business is experiencing a downturn in volumes affected by imports, while inland volumes are showing signs of improvement, the group said in a trading update. It has experienced average price increases of 8%-10% across the region.
The group has been grappling with a lack of infrastructure investment, muted price increases in Southern Africa and weak consumer demand. It is also battling with a heavy debt burden.
PPC is currently trying to refinance and restructure the group, saying on Wednesday it expects negotiations over the relaxation of SA debt covenants to be finalised in the next three months.
The extension of capital payments is also progressing well.
The group had gross debt of some R5.1bn as of its half-year to end-September, while its market capitalisation was about R1.5bn on Wednesday morning. Southern African debt as of the end of September was R1.7bn.
Group capital has been reduced significantly when compared with the same period the year before, the group said, and is expected to be at the lower end of the guided range of R600m-R800m, the statement read.
In morning trade on Wednesday PPC’s share price was unchanged at 94c, having fallen about 80% over the past 12 months.