Pretoria Portland Cement’s share price rose 6.5percent higher after it said yesterday that its headline earnings per share were expected to decrease more than 20percent compared with the 20cents per share achieved for the year to March 31, but June cement sales grew in double digits.
The share price rose 6.5percent to 85c, closing at R0.87 yesterday. The price has fallen steadily since trading at R4.84 in August last year. PPC’s growth in cement sales arose in June, ironically, from the Covid-19 pandemic, as less imported cement entered the country.
Basic earnings per share were expected to decrease by more than 20percent compared with the 16c per share for the prior comparable period. The anticipated decline in earnings was after impairments of property, plant and equipment, expected credit losses and other fair value adjustments were taken into account.
The general economic environment and the Covid-19 pandemic would have a material impact on these adjustments, which were still being finalised, the group said in an operational update. PPC expects to publish its year-end results on August 31.
In the update, PPC said its cement operations ramped up in May 2020 post the lifting of the Covid-19 restrictions imposed at the end of March, across most of the jurisdictions in which the group operates. Sales volumes were significantly impacted in April. In May 2020, South African cement sales volumes were still around 30 to 35percent below May 2019, as the operations gradually resumed.
In PPC International cement sales volumes in May were less than 5percent below the same period in 2019, driven by strong sales in Rwanda. But demand recovery had been strong in June 2020, as the cement sales volumes in South Africa grew by double digits, compared to June 2019.
This was mostly due to the absence of imports that had given an opportunity for local producers like PPC South Africa to grow.
PPC said it was crucial for the sustainability of the local cement industry that substandard cement and imports were properly addressed.
Cement sales volumes in PPC International also showed year-on-year growth in the month of June 2020.
Discussions with the lenders around a capital restructuring continued, and further details would be made at the announcement of the annual results, PPC directors said.