CEMENT manufacturer PPC Africa suffered a major dent to its profitability as a result of the 75% depreciation of the Zimbabwean dollar against the South African rand, the company has revealed.
In its summarised consolidated financial statements, PPC revealed that the hyperinflationary environment in the country had affected the company’s overall performance
“The impact of hyperinflation accounting and the 75% depreciation of the Zimbabwean dollar against the South African rand reduced PPC Zimbabwe’s contribution to the group’s financial performance,” the company said.
“In light of the prevailing economic conditions affecting the value of the Zimbabwean dollar, PPC Zimbabwe is focused on cash preservation and maximising US dollar EBITDA [earnings before interest, taxes, depreciation, and amortisation].
“The business is financially self-sufficient and declared and paid a cash dividend to PPC of US$4,4 million in December 2020.
“Subsequent to the year-end, a further dividend of US$2,6 million was paid to PPC”
The cement manufacturing entity said it had received a further US$11,2 million during FY 2021 from the Reserve Bank of Zimbabwe as the central bank settles the debt from legacy funds.
It said despite the challenging economic environment and the impact of COVID-19-related lockdown restrictions on sales, PPC Zimbabwe cement volumes increased by approximately 10%, supported by ongoing infrastructure projects.
“PPC implemented price increases in local currency to offset input cost inflation and the devaluation of the local currency.”
It said despite the recovery in cement demand in most of its markets, PPC was mindful of the prevailing uncertainties around the COVID-19 pandemic and its impact on economic activity.
“PPC will remain focused on improving cost competitiveness and cash generation.
“It will take the necessary strategic and operational measures to ensure that it can continue to serve its customers, protect its employees, and implement strategic initiatives to ensure financial sustainability through all demand cycles.”