PPC, the largest manufacturers of cement on the continent, would be the focus of cost reduction, while the biannual price increase will continue as the group aims to recover from the margin reduction that it experienced in the 2023 financial year, CEO Roland van Wijnen said in the integrated report released on Friday.
He said the group would also continue to focus on cash generation and distributions to shareholders.
The group is also in the process of finding a successor to Van Wijnen, whose contract had been extended to December 31, 2023.
"We highly value his contribution to restoring organisational stability and driving the strategy forward over his tenure,” chairman Jabu Moleketi said in the report. Moleketi said he expects PPC’s operating environment to remain challenging.
Van Wijnen said that with PPC’s deleveraging new substantially complete and legacy issues behind them, financial 2023 was the first financial year in his tenure that the group could look beyond the restructuring it had undergone in the past two years, and focus on the core southern African market to improve cash generation and overall equipment efficiency.
"At the same time we were able to make progress against our medium term goals of prudent capital allocation, accelerating decarbonisation and exploring new low carbon revenue streams,” he said.
In the year to March 31 group revenue was flat at R9.9 billion. Group earnings before interest tax depreciation and amortisation fell 9% to R1.36bn. Cash generated from operating fell 10% to R1.37bn, while cash generated from continuing operations decreased by 25% to R1.1bn.
Cement sales volumes remained under pressure in the South African and Botswana markets, falling 5.8% compared with the prior year. Cimerwa saw a 1% increase in line with expectations due to a planned kiln shutdown in November and PPC Zimbabwe's volumes were 16% down despite robust cement demand from concrete product manufacturers and government-funded infrastructure projects.
South Africa remains the largest proportion of the overall operations. It, however, continues to be affected by the significant headwinds prevalent in the country, most notably, the lack of policy certainty and slow progress in the evolution of the policy environment, poor performance of state-owned enterprises, load shedding and subdued economic growth.
"Companies like ours, that make significant long term investments, require policy stability and conducive engagements with regulators. This is especially important in a dynamic environment and we had hoped for progress to materialise more quickly. We are aware of the many competing priorities facing South Africa and hope that the environment stabilises in the future,” said Van Wijnen.
He said the group was also making progress on the decarbonisation targets in 2021. The group expected to reach the targets in 2025 through initiatives related to clinker factor reduction, electrical efficiency, renewables, thermal efficiency and alternative fuels.
“We expect the impacts of these efforts to be realised not just in terms of environmental benefits, but also value accretion,” said Van Wijnen.
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