'Cement pricing aligned with inflationary rise'

LEADING cement manufacturer, Pretoria Portland Cement (PPC), says despite the difficult trading conditions, average cement prices in the Southern Africa region last year increased marginally by between one and two percent.

The group, which also operates a local unit PPC Zimbabwe, in a trading update published by the Zimbabwe Stock Exchange yesterday, said: "Despite difficult trading conditions, average cement prices in Southern Africa (including Botswana) increased by one percent to two percent for the period.

"Cement volumes were down two percent to three percent up to December 2018, against the backdrop of estimated market contraction of four percent to five percent."

It said price increases of between eight percent and 12 percent were implemented on the 15th of January this year in certain regions.

Total cement imports increased by 80 percent from January to November 2018 compared to the prior comparable period, with imports into Cape Town increasing by 48 percent to 209 000 tonnes, although still substantially lower than the majority of imports into Durban which increased by 84 percent.

The Western Cape has seen a marginal recovery in volumes post the drought. On its Zimbabwe subsidiary, the cement producer, during the period under review, said volumes grew by low single digits compared to the prior year for the same period.

And this was due to operational challenges experienced in the third quarter of the financial year.

"Pricing has been aligned with local inflationary increases. "Nonetheless, recent policy announcements regarding fuel price increases have placed consumers in Zimbabwe under strain," it said.

PPC Zimbabwe management is implementing a number of initiatives to mitigate the impact of inflation and liquidity constraints on the business and on the broader PPC group.

Liquidity management and cash preservation measures include focusing on local procurement, with 90 percent of input costs sourced locally, increasing exports to neighbouring countries, continuing clinker imports from South Africa as well as share buy-back of PPC shares listed on the ZSE though its local subsidiary.

It said despite the challenging trading environment, the group remains positive about its operational strength and customer support for its brand.

"In South Africa, PPC intends to maintain price increases implemented.

"The company is engaging the authorities with regard to imports to ensure industry sustainability and also market stabilisation.

"PPC Zimbabwe remains focused on cash preservation. In the DRC, the business continues to entrench route to market strategies to increase volumes and prices.

"In Rwanda, the Cimerwa business continues with business optimisation in order to achieve optimal capacity," said the group.