PPC says H1 earnings to fall 90 percent
BULAWAYO—REGIONAL cement maker Pretoria Portland Cement (PPC) says it expects half year earnings to fall by up to 90 percent compared to the prior period due to high financing costs associated with a $150 million facility to buy own shares.
In June this year, PPC raised a R2 billion ($148,14 million) liquidity and guarantee facility to redeem the outstanding PPC notes which attracted high costs.
Also, PPC shareholders in August approved a rights issue to raise $253 million as part of a strategy to review its balance sheet and to pay off debts due this year and next year.
In a trading statement to shareholders on Monday, PPC said it expects its headline earnings per share for the six months ended September 30, 2016, to be between 19 cents and 8 cents per share.
“Furthermore, basic earnings per share for the six months ended 30 September 2016 is expected to be between 70 percent and 90 percent lower than the basic earnings as reported for the six months’ period ended March 31, 2016, which translates to expected basic earnings of between 21 cents and 7 cents per share,” said PPC.
The group said it achieved “reasonable cement volume growth”, however weakness in selling prices has led to a marginal increase in gross profit.
“The expected earnings before interest, taxation, depreciation and amortisation for the period will approximate that recorded for the six months ended 31 March 2016,” the company said.
The group said the non-recurrence of the exceptional profit of R117 million made on the sale of non-core assets in the prior period has also contributed to the decline in basic earnings per share.
“Furthermore, the devaluation of local currencies, in DRC and Rwanda, against the US dollar has led to revaluation losses being recognised on foreign currency denominated receivables and borrowings in the current reporting period,” said PPC. – The Source