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Harare - PPC [JSE:PPC] has reported a 66% drop in earnings for the six months to end-September 2016, as finance costs soared following the arrangement of a R2bn liquidity and guarantee facility.
In a statement released on Wednesday, PPC said profits were reduced to R58m as a result of a 54% increase in finance costs due to the liquidity “event.”
Finance costs were R509m, up 54% on the previous period's R330m, following R195m in costs incurred for the liquidity and guarantee facility as well as other related costs.
“Consequently headline earnings per share were down 66% to 14 cents while normalised headline earnings per share were down 16% to 36 cents,” the company said.
Revenue for the period amounted to R5.2bn for the six-month period compared to R4.6bn for the six months ended March 31 2016. The 15% rise is attributable to higher group cement sales volumes, specifically in South Africa where cement volumes were up 13%, and Rwanda where volumes were up 19% to 148 000 tonnes.
Performance for the six months is however being compared to the last reported period, the six months to March 2016 after the company changed its financial year-end to March from September.
Commenting on the results, chief executive officer Darryll Castle said the successful completion of the rights issue “allowed us to significantly reduce debt levels and strengthen our balance sheet against the cyclical nature of our business”.
Cement sales volumes in the six-month period increased 13%, but earnings were hurt by weaker selling prices and the devaluation of local currencies relative to the US dollar in countries where the producer operates.
The company opened a plant in Rwanda in August 2015, commissioned a new facility in Zimbabwe this month and is nearing completion on operations under development in the Democratic Republic of Congo and Ethiopia.
“The Zimbabwe milling plant in Harare has sold its first 1 000 pallets of bagged cement. Our projects in the DRC and Ethiopia are both at advanced stages and will be commissioned in the 2017 calendar year," said Castle.
