Regional cement maker PPC Limited says its Zimbabwean subsidiary suffered a seven percent slump in sales volumes in the 5-months to August (H1) but however still managed to sustain previous comparative period levels thanks to a robust demand in the Rwandan market.
PPC Zimbabwe operations suffered from the impact of a maintenance-related kiln shutdown; however, the resumption of clinker manufacturing at the end of May 2022 enabled improved sales volumes in the second quarter of FY23.
“Group cement sales volumes (including Zimbabwe) for the five months ended August 2022 were in line with the previous comparable period as subdued demand in South Africa and the impact of a maintenance-related kiln shutdown in Zimbabwe were offset by robust demand growth in Rwanda,” said PPC Limited.
Demand for cement however remains strong in Zimbabwe as a result of both residential construction and government-funded infrastructure projects.
For the five months ended August 2022, PPC’s group revenues, excluding Zimbabwe, which is impacted by hyperinflation accounting, increased by 9 percent, driven by robust demand in Rwanda.
The South African-headquartered group however noted increased availability of foreign currency in the Zimbabwean economy, with more than 70 percent of cement sales during the period under review occurring in foreign currency.
PPC Zimbabwe implemented US$ price increases of 5 percent in March 2022, 2 percent in April 2022 and a further 5 percent increase in August 2022.
The Rwandan subsidiary, CIMERWA continued to see strong demand for cement in all its markets, with cement sales volumes increasing by 16 percent period-on-period for the five months ended August 2022.
“CIMERWA’s domestic cement sales benefited from increased demand from government-sponsored infrastructure projects and a recovery in general building activity. In addition, cement exports benefited from sustained demand in eastern Democratic Republic of Congo and the expansion of CIMERWA’s route to market initiatives,” said the group.
In contrast, cement sales volumes in South Africa and Botswana decreased by 1 percent period-on-period for the five months ended August 2022.
Cement sales volumes in the inland region decreased after experiencing a slow start to FY23, offsetting the high single-digit demand growth in the coastal areas.
“Cement sales volumes in the coastal region increased due to a decline in imports in the Western Cape, a recovery in industrial construction activity and the resumption of postponed government projects.”
The average selling price increased by 5 percent during the period under review. This was insufficient to fully offset the impact of input cost inflation as the cash cost of sales increased by low double-digits in percentage terms.