PPC ups Zimbabwe shareholding to 90 percent
Nqobile Bhebhe, [email protected]
SOUTH Africa’s biggest cement producer PPC, which has operations in Zimbabwe, now holds 90 percent of PPC Zimbabwe after the repurchase and cancellation of 19 percent of shares was approved at an extraordinary general meeting held in August.
All such shares were subsequently repurchased at US$ one cent each and cancelled.
In an operating update for the five months ended 31 August, the cement maker said shareholders were previously advised that 19 percent of the 29,6 percent of PPC Zimbabwe held by various indigenisation parties vested on 5 July 2023 and PPC Zimbabwe expected to re-purchase such shares at US$ one cent each in accordance with the relevant agreements.
“The repurchase of such shares was approved at an extraordinary general meeting of PPC Zimbabwe’s shareholders on 29 August 2023 and all such shares were subsequently repurchased at US$ one cent each and canceled.
“Consequently, PPC now holds 90 percent of PPC Zimbabwe. Economically, PPC will receive 99,5 percent of all dividends until the notional vendor financing of the remaining indigenous shareholder is repaid.”
A once-off costs incurred by PPC in connection with the unwinding of the indigenisation transaction amounted to R42 million.
The update notes that PPC Zimbabwe unit exhibited growth in the period under review as a result of both residential construction and Government-funded infrastructure projects.
In line with the National Development Strategy (NDS1) ideals, the Second Republic led by President Mnangagwa has championed several high-impact infrastructure development projects across the country, which are at different stages of completion.
These include road rehabilitation, housing development, dam construction, as well as schools and hospitals, among others.
“The cement market in Zimbabwe continued to show growth as a result of both residential construction and Government-funded infrastructure projects.
“PPC Zimbabwe continued to win back market share during the period following the planned maintenance shutdown in the prior year,” noted PPC.
PPC operates a clinker plant at Colleen Bawn in Gwanda in the southern part of the country, as well as cement-milling plants outside Bulawayo and Harare.
The extended shutdown restricted clinker production and cement volumes uptake.
The kiln operations were halted as the company carried out routine maintenance works for the furnace.
Cement sales volumes increased 42 percent period on period with the average US dollar selling price increasing by 12 percent during the period under review.
The firm added that the improved volumes and pricing allowed for a meaningful improvement in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margins to 27 percent, a significant improvement from 14 percent in the comparable period, when there was a planned shutdown.
PPC received a US$3,5 million dividend in July 2023 and anticipates an additional dividend to be declared upon the publication of PPC Zimbabwe’s interim results in November 2023.
PPC’s outlook remains unchanged as it said it will continue to focus its resources on improving profitability and cash generation in South Africa while preserving its sound market positions in Zimbabwe and Rwanda.
PPC Zimbabwe anticipates a continued recovery.