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PPC’s profits boosted by expansion in Zimbabwe, Rwanda

Group revenue up 1% to R5.2 billion.
PPC's group net debt is down to R4.4 billion. Picture: Moneyweb

South African cement maker PPC on Thursday reported a 36% rise in half-year earnings, helped by a robust performance in Zimbabwe and Rwanda.

PPC, the subject of takeover approaches from local rival AfriSam, Switzerland’s LafargeHolcim and Irish building materials firm CRH, said headline earnings per share for the six months ended September rose to 19 cents from 14 cents.

Read: PPC’s rejection of Fairfax offer puts the skid on AfriSam’s debt restructure

Headline EPS, a widely-used performance measure in South Africa, strips out certain one-off items.

Group revenue edged up 1% to R5.2 billion ($375 million), while core profits or earnings before interest, tax, depreciation and amortisation rose by 4 % to R1.2 billion.

“The period under review has been transformational for the group with our new investments in Zimbabwe and Rwanda contributing positively to our growth,” chief executive Johan Claassen said.

The company has over the years pushed deeper into the rest of Africa as profit has slumped in its domestic market. In the year to end March it increased its cement capacity by 33% in the year to end March after commissioning its Zimbabwean mill.

Rwanda’s sales volumes increased by more than 30% in the period while Zimbabwe’s were up by more than 25%.

The firm, which has operations in six countries across Africa said new plants in Ethiopia and DRC have been completed and are in the process of being tested and commissioned.

Claassen, who took over at the helm from Darryll Castle after his sudden resignation in July, said the firm has made significant progress in negotiating its debt obligations in South Africa and the Democratic Republic of Congo (DRC).

“(In the DRC) We have a term sheet on the table, the term sheet needs to be finalised. It will give us a term holiday for 24 months,” Claassen told Reuters.

In South Africa as well, the firm has received a term sheet from the funders for its R1.6 billion bullet payment due in June 2018.

Group net debt has fallen to R4.4 billion, down from R4.7 billion at the end of March. 

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