Displaying items by tag: PPC Zimbabwe
Zimbabwe: PPC Zimbabwe says that a planned fly ash beneficiation project at a power plant in Zimbabwe will now take place in early 2025 instead of in 2024. This is due to delays in accessing the power plant to complete the design and commercial contract, according to the cement producer. The Chronicle newspaper has reported that, as a result, PPC Zimbabwe’s capital expenditure investments so far in 2024 are behind its previous full-year guidance of US$31.8m.
Albert Sigei appointed as managing director of PPC Zimbabwe
18 October 2023Zimbabwe: PPC Zimbabwe has appointed Albert Sigei as its managing director from the start of 2024. He succeeds Kelibone Masiyane in the post, according to the Chronicle newspaper. Masiyane was appointed as the managing director of the subsidiary of South-Africa based PPC in 2016, having joined the company in 1994 as a trainee electrical engineer at the Colleen Bawn Plant.
Sigei is currently PPC’s Head of Strategic Initiatives, a post he has held since February 2023. Before this he was the chief executive officer (CEO) of Cimerwa PPC in Rwanda from 2000. He worked for over 17 years for LafargeHolcim and its subsidiaries becoming the CEO of LafargeHolcim Malawi from 2016 to 2019 and the chief operations officer of the East African Portland Cement Company (EAPCC) in Kenya in 2015. Earlier in his career he worked for PriceWaterhousCoopers. A graduate in mechanical engineering from the University of Nairobi, Sigei holds a number of qualifications in accountancy and business.
PPC completes solar tender in ‘challenging’ Zimbabwe market
25 September 2023Zimbabwe: South Africa-based PPC says that it has completed a solar plant tendering process for its Colleen Bawn and Bulaweyo plants. Chief executive officer Roland van Wijnen said that a 30MW captive plant has been approved by the board, generation licenses have been approved and that the project site has been cleared ahead of construction.
Van Wijnen added that PPC continues to see Zimbabwe as a ‘strong market for the group’ despite some economic challenges, explaining “We took a relatively long operational stop to ensure our operations in the country are future-proof and improved from an environmental standpoint. The plant is now performing well from both an output and cost-per-tonne perspective. We knew our earnings before interest, tax, depreciation and amortisation (EBITDA) would be reduced due to this operational stoppage. We have since stepped up production and reclaimed market share and we anticipate EBITDA to meet or exceed full year 2022 levels in full year 2024.”
PPC publishes 2023 financial year trading update
16 June 2023South Africa: PPC has advised investors that its full-year 2023 results will show a more-than-doubling of its headline loss per share from continuing operations. The group said that its cement sales volumes in South Africa and Botswana fell by 5.8% year-on-year, while volumes in Zimbabwe dropped by 16%. Its subsidiary Cimerwa increased its cement sales volumes during the year by 1%. Despite the local decline in volumes, PPC increased its revenues in South Africa and Botswana by 1.7%. South Africa and Botswana cement sales constituted 46% of group revenues, Zimbabwe cement sales 17% and Rwanda cement sales 15%.
PPC contemplating sale of Zimbabwe business
08 February 2023Zimbabwe: South Africa-based PPC is reportedly considering selling PPC Zimbabwe for US$200m. The Zimbabwe Independent newspaper has reported that the group received an unsolicited offer from a local company.
PPC said “PPC’s board has a duty to assess any such approaches on their respective merits.”
Children burnt at PPC Zimbabwe cement plant
18 January 2023Zimbabwe: Three boys aged 11, 12 and 14 were injured at PPC Zimbabwe integrated Colleen Bawn cement plant on 13 January 2023. Two of children reportedly jumped into a dump site at the plant and sustained second-degree burns from hot material, according to News24. The third child suffered burns whilst trying to help the other two. The children are in a stable condition. The dump is reportedly quarantined from the local community. An investigation is ongoing.
Update on Zimbabwe, January 2023
04 January 2023Lafarge Cement Zimbabwe (LCZ) received an unwelcome present before Christmas when the US Office of Foreign Asset Control (OFAC) placed the company buying it on its economic sanctions list. OFAC made its announcement on 12 December 2022. However, the cement producer said that its parent company, Associated International Cement, had concluded its sale of a 76% stake in LCZ to Fossil Mines on 6 December 2022. Local press reports that the Zimbabwe Stock Exchange halted trading in the cement company on 23 December 2022. Then, LCZ said on 29 December 2022 that the OFAC sanctions had “impacted some processes” within it. It added that it was considering various courses of action to protect the business and the interests of all stakeholders.
OFAC took action against Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, due to alleged links to a previously sanctioned individual, Kudakwashe Tagwirei, and his company, Sakunda Holdings. OFAC said that Tagwirei had “materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe.” It accused him of using his relationships with government officials to gain state contracts, to receive access to currencies, including the US Dollar, and of supplying luxury items such as cars to ministers. It added that Chimuka was a “longtime business partner” of Tagwirei. Fossil Agro was also linked to a mismanaged agricultural subsidy scheme.
When a company says it has concluded a divestment or acquisition the expectation is that everything has finished. However, LCZ has admitted that the OFAC action has caused it some problems. We’ll have to wait for more information to be released to appreciate the full extent of these ‘problems.’ However, it is worth noting that government capital controls caused delays for the handover of a new vertical cement mill ordered from China-based CBMI to LCZ in mid-2022. At the time it was reported that the cement producer still owed the supplier around US$5m but was unable to make the payment due to economic measures the government had taken to avoid depreciation of the local currency. Other potential issues could also lie in any continuing services or materials that Associated International Cement and its parent company Holcim might have agreed to supply to Fossil Mines in the future as part of the divestment deal.
Looking at LCZ’s business more generally, in its third quarter trading update it said that revenue was down by 43% year-on-year due to suppressed cement and mortar sales volumes. Yet, this was due, in part, to a roof collapse at the company’s plant in late 2021 and the commissioning and ramp-up of that new mill in the fourth quarter of 2022. So the company expects ‘significant’ recovery in its sales volumes in 2023. In a sobering aside illustrating the realities of doing business in Zimbabwe, it also mentioned that the local interest rate jumped to above 200% in July 2022! Despite all of this though, it noted that both residential and government-based infrastructure markets were driving market demand.
South Africa’s PPC reported a fall in its cement sales volumes from its subsidiary PPC Zimbabwe in the six months to September 2022 with knock-on declines to revenue and earnings. It blamed this on a planned kiln shutdown, noted the negative role of hyperinflation and forecast that volumes would improve subsequently due to ‘robust’ cement demand. It pointed out that its earnings were hit during the maintenance period because it had to import clinker from South Africa and Zambia and that this was more expensive than locally manufactured clinker. The other thing that both LCZ and PPC raised were power cuts, although LCZ reported that unscheduled outages had decreased in the third quarter of 2022.
The growing demand for cement in Zimbabwe as reported by both LCZ and PPC helps to explain how Holcim was able to finalise a deal to sell its local subsidiary in 2022. Operational and financial hurdles such as coping with hyperinflation and power cuts show the problems these companies have also faced running a business in the country. Merger and acquisition deals in the cement sector often face travails as they are proposed, negotiated, made public and then put to the scrutiny of regulators. It seems unusual though for a divestment deal to run into problems after it has seemingly been closed.
PPC’s earnings fall by 12% to US$42m in first half
16 November 2022South Africa: PPC’s earnings fell by 12% year-on-year to US$42m in the six months to September 2022, excluding its subsidiary in Zimbabwe due to hyperinflation. In South Africa and Botswana the group reported higher sales in coastal regions due to less imports but tougher conditions inland that led to a 2.6% fall in cement sales volumes. Despite this, it raised its revenue through price rises. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 29% to US$29.9m. Performance was better in Rwanda where its Cimerwa subsidiary increased its sales volumes by 11% and its EBITDA by 63% to US$14.5m. PPC Zimbabwe’s sales volumes declined by 13% due to a planned kiln shutdown in the first quarter and margins were negatively affected by the use of imported clinker primarily from PPC South Africa and increased maintenance costs. However, sales volumes improved in the second quarter. EBITDA fell by 48% to US$8.59m.
Roland van Wijnen, the chief executive officer PPC, said, “The PPC group continues to deliver sound cash generation and deleverage the balance sheet despite difficult trading conditions in its core South African and Botswana cement market, offset by positive trading conditions in its Zimbabwe and Rwanda operations. To maintain volumes in the South African and Botswana cement markets, sales price increases were limited to 5% in the period under review. Key input costs, especially those related to fuel and energy, increased at double-digits in percentage terms.”
South Africa: PPC’s full-year consolidated sales were US$624m in the 2022 financial year, which ended on 31 March 2022, up by 11% year-on-year from US$561m in the 2021 financial year. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 6.9% to US$94.5m from US$101m. During the year, the group reduced its debt by 55% to US$63m from US$139m.
The group noted high cement demand across its markets in the 2022 financial year, including a sales volumes increase of 28% year-on-year in Zimbabwe. It also noted a 19% year-on-year increase in South African cement imports, mainly from Vietnam, which constituted 10% of sales in the 2022 financial year. PPC said that it will ‘immediately make additional capacity available’ to capture the increased demand through the rest of 2023 financial year.
Zimbabwe: South Africa-based PPC has held a groundbreaking ceremony for a US$40m project to build solar power plants with a joint output of 30MW to support its integrated Bulawayo and Colleen Bawn cement plants. The Bulawayo plant will set up a 10MW plant, with 5MW earmarked for internal use, while the Colleen Bawn plant will develop a 20MW capacity, 12MW being used internally, according to the Chronicle newspaper. The excess electricity will be fed in the national grid. PPC has chosen ATC Consortium to build and operate the solar plants under a 20-year power purchase agreement.