Listed cement producer, PPC Zimbabwe Limited, says it expects to conclude repayments of its legacy debt in the upcoming financial year.
PPC Zimbabwe had accrued a US$21 million debt due to cash flows generated in the country by foreign entities that could not be repatriated to foreign suppliers due to foreign exchange shortages.
"Management expects the debt to be fully repaid during the FY22 year," said PPC Africa group chief executive officer Roland van Wijnen in its FY21 report.
The cement producer's debt repayments have been boosted by a 2019 move from the Reserve Bank of Zimbabwe (RBZ) to assume legacy foreign debts.
In this regard PPC said it managed to repay US$11,2 million during the previous financial year.
"The Reserve Bank of Zimbabwe continues to honour its obligation to settle PPC Zimbabwe's debt from legacy funds with a further US$11,2 million paid during FY21," said the group CEO.
Meanwhile, despite improved sales volumes in FY21, the Zimbabwean subsidiary was weighed down by inflationary pressures.
"Despite the challenging economic environment and the impact of Covid-19 related lockdown restrictions on sales, PPC Zimbabwe cement volumes increased by approximately 10 percent, supported by ongoing infrastructure projects. PPC implemented price increases in local currency to offset input cost inflation and the devaluation of the local currency," said the group.
PPC Zimbabwe's revenue decreased by 13 percent to R1 623 million, from R1 861 million in the prior comparable period.
Management said the impact of hyperinflation accounting and the 75 percent depreciation of the Zimbabwean dollar against the South African Rand reduced PPC Zimbabwe's contribution to the group's financial performance.
But in functional currency terms, PPC Zimbabwe's revenues increased by 251 percent.
Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) in South African Rand declined by 32 percent to R481 million, compared to R707 million in FY20 with EBITDA margin contracting to 29,6 percent, versus 38 percent in March 2020.
In functional currency, EBITDA increased by 173 percent to $2 718 million, from $994 million last year.
Management maintains that the Zimbabwean business will focus on cash preservation, although also believing that it is financially secure.
"In light of the prevailing economic conditions affecting the value of the Zimbabwean dollar, PPC Zimbabwe is focused on cash preservation and maximising US dollar EBITDA," said van Wijnen.
"The business is financially self-sufficient and declared and paid a cash dividend to PPC of US$4,4 million in December 2020. Subsequent to the year-end, a further dividend of US$2,6 million was paid to PPC."
With respect to the performance of the wider group, revenues grew by 3 percent year-on-year to US$625 million from US$607 million in the same period in 2020.
Group EBITDA increased by 16 percent to US$112 million from US$96,6 million.