Pretoria Portland Cement (PPC) says its capital expenditure remains behind the target of R600 million for the financial year to March 2024 due to delayed implementation of the fly ash project in Zimbabwe.
Last November, the group announced its capital expenditure programme, including the fly ash project, which was at the procurement stage.
In an operational update for the 10 months ended January 31, 2024, PPC said the delayed implementation of the project was on account of the delay in accessing the power plant to complete the design and commercial contract.
"Capital expenditure for the group remains behind the guidance of R600 million for the full financial year mainly due to the delay of the fly ash project (expansion capex) in Zimbabwe.
"This is a timing issue due to a delay in accessing the power plant to complete the plant design and commercial contract.
"This is now expected to commence early in FY25 as opposed to FY24 thereby delaying the benefits of this expansion project for approximately one year," said PPC.
It said the South African and Botswana free cash flow, being net cash inflow before financing activities and excluding dividends from Zimbabwe, increased to R364 million in the current period from R242 million in the comparable period.
The share repurchase programme reached the R200 million approved level during the first half of March 2024.
"Following the receipt of the proceeds from the disposal of CIMERWA (Rwanda operation), South Africa and Botswana turned cash positive during the current period and at January 31, 2024, were in a net cash position of R280 million."
Recently, PPC announced the disposal of its 51 percent shareholding in CIMERWA.
"Zimbabwe continues to remain debt-free and held R95 million in unencumbered cash at January 31, 2024. The group's targeted gross leverage of 1,3 to - 1,5 times the South African and Botswana operations EBITDA (including dividends from Zimbabwe) remains unchanged," it said.
Meanwhile, the group during the period under review continued to post strong volumes of growth at its Zimbabwean operation rising by 41 percent driven by housing and Government-funded infrastructure projects.
The cement manufacturer is on record saying the Government identified infrastructure as one of the key economic enablers with priority being placed on infrastructural development including road rehabilitation, dam and housing construction.
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Such infrastructural development projects include Lake Gwayi-Shangani, whose construction is expected to be complete by the end of this year as well as the rehabilitation of the Harare-Beitbridge Highway, among others.
Since assuming power in 2017, the Second Republic has been prioritising residential and infrastructural development as outlined in the National Development Strategy 1 (NDS 1), which seeks to drive the country towards an upper middle-income economy status by 2030.
"Cement volumes continued to show strong growth, increasing 41 percent in the current period, albeit slightly lower than the half-year growth of 44 percent due to the impact of the stronger base in the comparable period.
"Growth continues to be strong as a result of both residential construction and government-funded infrastructure projects, constrained imports and a low base in the comparable period due to the extended shutdown," said PPC.
During the 10-month period, the group's revenue increased by 27,6 percent compared to the 10 months ended January 31, 2023.
"This was driven mainly by continued strong growth in PPC's Zimbabwe operations relative to the low base in the comparable period," said the group.
In July and November 2023, PPC Zimbabwe declared dividends of US$4 million and US$7 million respectively while the next dividend declaration is expected in July this year.
