PPC says sales volumes picked up in June amid lack of imports
The cement maker expects to report writedowns due to a deteriorating economic environment
The share of cement maker PPC had its best performance in over a month on Thursday. That was after it reported a recovery in demand in June as SA’s lockdown eased, although that was largely due to limited competition from exports.
The group also warned it was likely to report write-downs due to a deteriorating economic environment.
Cement sales volumes picked up by double digits in June, the group said, but this had been “mostly driven by the absence of imports that has given an opportunity for local producers like PPC SA to grow”.
PPC has been outspoken over what it terms “substandard” cement in the industry, as well as the threat of imports.
Volumes had fallen by between 30% and 35% year on year in May, the group said, adding it was still assessing the effect of the Covid-19 pandemic and a deteriorating economic environment in its business.
“The general economic environment and the Covid-19 pandemic will have a material impact on these adjustments, which are being finalised,” the group said.
On the back of the improved sales volumes and the various cost and cash preservation measures, cash flows for the last two months “have shown a positive trajectory”, the group said.
Headline earnings per share (heps) are expected to fall at least 20% from the prior periods 20c, the group said. Heps is a widely used profit measure in SA that strips out once-off or exceptional items to give a better indication of the underlying performance of a business.
In afternoon trade on Thursday, PPC’s share was up 8.75% to 87c, putting it on track for its best one-day performance since June 22. The group’s share has lost about two-thirds of its value so far in 2020, giving it a market capitalisation of R1.38bn on Thursday.
PPC expects to publish its results for the year to end-June on August 31, saying on Thursday it may issue another trading update in coming weeks.
Update: July 23 2020
This article has been updated with additional information throughout
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