By Alois Vinga
LEADING supplier of construction materials, PPC Cement has acknowledged increasing foreign currency availability in Zimbabwe, prompting the local unit to yield more US$ denominated sales.
The remarks are an independent confirmation of the deep economic reforms impact currently being implemented by authorities in Harare to stabilise the economy, achieve confidence and spur broader industrial growth.
It also marks a departure from the previous trajectory where acute foreign currency shortages choked companies.
To this end, measures which include boosting confidence to deposit foreign currency with local banks against a proven guarantee to withdraw at any given time have been implemented.
Other interventions have seen the installation of market discipline by stopping speculative borrowing and liberalisation of foreign currency trading on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction, which has culminated in the closure of the gap between the official and parallel market exchange rates.
Presenting a trading update for the five months ended August 31, 2022, PPC Cement conceded the positive developments.
“PPC noted increased availability of foreign currency in the Zimbabwean economy, with more than 70% of cement sales during the period under review occurring in foreign currency. PPC received a US$4, 4 million dividend in June 2022 and anticipates an additional dividend to be declared upon the publication of PPC Zimbabwe’s interim results in November 2022,” the company said.
The firm said the cement market locally continued to show robust high single digit growth as a result of both residential construction and government-funded infrastructure projects with the local unit implementing planned maintenance at the beginning of FY23 and recorded a 7% decline in cement sales volumes period-on-period.
“However, the resumption of clinker manufacturing by PPC Zimbabwe at the end of May 2022 enabled improved sales volumes in the second quarter of FY23. PPC Zimbabwe implemented US$ price increases of 5% in March 2022, 2% in April 2022 and a further 5% increase in August 2022,” the company said.
For the five months ended August 2022, PPC’s group revenues, excluding Zimbabwe, increased by 9%, driven by robust demand in Rwanda.
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.
In addition, cash generation remains positive and the group reduced net debt from 31 March 2022 levels.