South African cement giant PPC has consolidated its shareholding in its Zimbabwean subsidiary, PPC Zimbabwe, by buying back shares from local investors. The move comes as the company seeks to benefit from the growing cement market in the country.
PPC said in an operating update that it had repurchased 19% of the 29.6% of PPC Zimbabwe shares held by various indigenisation parties, who had acquired them as part of the government’s policy to empower local ownership of foreign businesses. The shares were bought back at US$0.01 each and cancelled, increasing PPC’s stake in PPC Zimbabwe to 90%.
PPC Zimbabwe, which operates a clinker plant in Colleen Bawn and milling plants in Bulawayo and Harare, is part of the larger PPC Group headquartered in South Africa. Besides Zimbabwe, PPC also has operations in Botswana, Ethiopia, the Democratic Republic of Congo (DRC), and Rwanda.
PPC Zimbabwe was delisted from the Zimbabwe Stock Exchange in 2020, along with other dual-listed companies, after the government suspected that they were contributing to the depreciation of the local currency.
According to the update, PPC Zimbabwe recorded a 42% increase in cement sales volumes in the five months ended August 2023, driven by residential construction and government-funded infrastructure projects. The average selling price also increased by 12% in US dollar terms, leading to a significant improvement in EBITDA margins from 14% to 27%.
PPC received a US$3.5 million dividend from its Zimbabwean unit in July 2023 and expects an additional dividend to be declared in November 2023.
The group’s cement sales volumes, including Zimbabwe and Rwanda, were 3% higher than the comparable period, despite a decline in South Africa. PPC said it would continue to focus on improving profitability and cash generation in South Africa, while preserving its market positions in Zimbabwe and Rwanda.
PPC also said it would implement cost containment measures to mitigate rising input costs, especially in its key South African market, where the economic climate remains muted. The company said it was well positioned to benefit from an increase in cement demand in South Africa.
PPC Zimbabwe anticipated a continued recovery, and the outlook for CIMERWA in Rwanda remained positive.
PPC is one of the leading cement producers in Africa, with a history dating back to 1892. The company has a vision to become a world-class provider of quality materials and solutions that build a better future for all.
