FIFI PETERS: We had outcomes popping out of PPC earlier at present, and they’re an necessary firm. They are certainly one of South Africa’s largest – if not the most important – cement gamers. They’ve been making good strides in phrases of turning their fortunes round. One of the largest complications that they had for a while was debt. It was over R6 billion at one stage, they usually’ve introduced it down significantly.
Profits this time round weren’t the most effective. Inflation points, hyperinflation points in Zimbabwe, have been a giant drawback for the corporate. In reality Zimbabwe was fairly answerable for growing their revenues, so Zimbabwe had a constructive position to play in that regard. But additionally hyperinflation in that nation at 85% led to a major erosion of its income, in addition to the numerous depreciation in the Zimbabwe greenback.
My colleague, managing editor Ryk van Niekerk, spoke with CEO Roland van Wijnen for extra on the outcomes.
RYK VAN NIEKERK: PPC is the most important cement producer in South Africa and the corporate reported full-year outcomes at present. These have been for the 12 months to the top of March, and through this era the group’s revenues rose by 11% to R9.9 billion. The group’s headline earnings per share got here in at minus 3 cents. That follows a 3%-plus efficiency final 12 months. But the group had very, very sturdy money flows and the group’s internet debt lowered from R2.2 billion to R1 billion. The board didn’t declare a dividend.
Roland van Wijnen is on the road. He’s the chief govt. Roland, thanks a lot for becoming a member of me. It looks as if it was a tough 12 months for PPC, and you’ll have battled quite a bit with rising enter prices. How would you summarise the 12 months?
ROLAND VAN WIJNEN: Thank you, Ryk. It’s a distinct story somewhat bit in a distinct market. In Zimbabwe and Rwanda sturdy quantity progress, as we anticipated. In South Africa muted progress, additionally as we anticipated. Of course the expansion usually is what’s in line with what is going on in the economic system. Inflation throughout all our enter prices in all our international locations, you’re completely proper. Despite that, due to the cost-mitigation measures and to some extent additionally worth will increase, the money era, as you indicated, was truly sturdy. So we converse concerning the resilient efficiency despite difficult buying and selling circumstances.
RYK VAN NIEKERK: How important is the South African contribution to the group’s earnings?
ROLAND VAN WIJNEN: It’s an necessary portion of it. More than half of our revenue is popping out of South Africa. The similar for our Ebitda [earnings before interest, taxes, depreciation and amortisation]. So greater than half of our Ebitda is popping out of South Africa. So South Africa is and can stay the engine for PPC.
RYK VAN NIEKERK: The authorities has introduced on a number of events that it’s going to deal with infrastructure funding to attempt to enhance the economic system. Of course I believe in each single infrastructure undertaking you utilize an enormous quantity of cement. Have you seen any improve in demand flowing from authorities’s infrastructure plans?
ROLAND VAN WIJNEN: I wouldn’t say that now we have seen in South Africa any significant improve in demand from authorities initiatives, the massive authorities initiatives. What is constructive for us, although, is that what we see on the native municipality degree; there truly smaller initiatives are occurring. But the massive infrastructure initiatives that we’re all hoping for and ready for, and that are sitting in the tenders that the development corporations talk about, nonetheless must filter right down to the cement business.
RYK VAN NIEKERK: Government additionally introduced that native infrastructure initiatives ought to use solely regionally produced cement. Of course, PPC is the most important producer of cement in the nation. What do you consider that announcement? And do you assume it’ll make a significant influence on native producers like yourselves?
ROLAND VAN WIJNEN: As you talked about, when this was introduced I believe it’s improbable that the federal government has recognised that the usage of native cement is necessary. The actual query is after all: how are you truly going to implement that? You additionally know that you just’re not purported to drive by way of a purple robotic – [but] individuals nonetheless do it. So if there are not any penalties and no sustaining of that regulation, then it has no significant influence.
So far we see that the influence is proscribed as a result of there are restricted massive infrastructure initiatives, and sustaining that very same regulation goes to be tough. What we’re pleading for continues to be a basic safety from the dumping that we see occurring from varied international locations in the world – [which] carry cement into the nation and destroy employment.
RYK VAN NIEKERK: How a lot of the cement we use in South Africa is imported?
ROLAND VAN WIJNEN: If we take a look at it, it’s about 1.4 million metric tonnes. That is the equal of a full cement plant that employs a whole bunch of individuals straight and 1000’s not directly.
RYK VAN NIEKERK: Twenty %, 30%?
ROLAND VAN WIJNEN: It’s 10% of the entire market, roughly.
RYK VAN NIEKERK: And that 10% can have an affect on the pricing in South Africa. Is it important sufficient to have such a big effect?
ROLAND VAN WIJNEN: Well, it units the costs, after all. It’s not the one driver of costs in the market, however it should set the market there when it lands. As I mentioned earlier than, in our opinion it’s a transparent case of dumping, which we want the federal government to research.
RYK VAN NIEKERK: Would that have an effect on pricing?
ROLAND VAN WIJNEN: It won’t have an effect on pricing straight. Pricing is basically decided by enter components – electrical energy going up, coal going up, gas going up or taking place. It works in each instructions. There is a lot capability in the South African market that the worth is ready truly by low competitors, so in that sense I’m not so involved.
The key factor for me is definitely the supply of the product. The second the nation turns into too depending on imports – these inputs come and go, relying on availability in offshore areas – I believe that’s the key factor, plus the employment that I discussed earlier than.
RYK VAN NIEKERK: Your revenues rose by 11%. How a lot of that comes from worth inflation?
ROLAND VAN WIJNEN: If we take a look at South Africa – let’s make it as the principle engine – we have been confronted with a 9% price improve of our enter price. We managed to cut back that by 6%, due to effectivity measures, and we elevated costs by 5%. So for our South African cement the revenue improve is 5% pushed by worth and 1% by quantity.
RYK VAN NIEKERK: And the brand new monetary 12 months? It appears as if PPC is finding out the steadiness sheet, and clearly that permits you to take you head out from below the hood and take a look at new strategic alternatives. What do you anticipate for the brand new 12 months?
ROLAND VAN WIJNEN: It does, and I’m comfortable to say that now we have now restored – that is previous tense – our steadiness sheet. So that’s in order. It permits us, if we proceed to generate the money quantities that now we have generated in the final monetary 12 months, to rethink about dividends as certainly one of our priorities, and secondly to speculate in decarbonisation of our of our cement-issue merchandise.
RYK VAN NIEKERK: Roland, thanks a lot in your time at present. That was Roland van Wijnen, the chief govt of PPC.
