Zimbabwe Stock Exchange dual listed regional cement manufacturer PPC has said its Zimbabwe operations have been affected by loadshedding which has seen the country experience between 16-18 hours with no power.
In an operational update for the 12 months ended March 31, 2023, the group said PPC Zimbabwe has engaged the authorities to reduce the impact of the lack of electricity on critical industrial sectors such as cement manufacturing and to ensure a level playing field with importers.
“Sales volumes in the second half of FY23 have been muted due to significant power interruptions and a more gradual than anticipated recovery of market share lost to imports,” read part of the update.
This comes after energy minister Zhemu Soda yesterday told Parliament last week there was great unreliability when it comes to Hwange Power Station.
Soda was responding to legislators in the National Assembly who wanted to know why Zesa had stopped issuing load-shedding schedules.
“At the moment, it’s very difficult to come up with a schedule because we have unplanned power outages at Hwange due to its age. We cannot plan well based on the capacity of Hwange. We have unplanned outages that are occurring from Hwange. In the morning today, we were obtaining a capacity of 387 megawatts, and you will be surprised that it can go down to 100 megawatts,” he said.
“The four units that are currently on service, some would have gone out of service. So the power station is not reliable at the moment because of age. We will soon be availing a load-shedding schedule after the coming in of unit seven and unit eight. If there is going to be any deficit after the two units come in, then Zesa will have to give a load-shedding schedule.”
Zimbabwe has a peak demand of 2 000MW, but according to the Zimbabwe Power Company (ZPC) website, Kariba South, which has a capacity of 1 050MW at its hydroelectric power plant, was yesterday producing 200MW.
As at September 30, 2022, PPC Zimbabwe reported a decline in sales volumes of 13 percent for the first six months of FY23 due to the impact of a longer than usual kiln stoppage to implement operational and environmental performance improvements with the expectation that sales volumes would recover in H2 of FY23.
For the full year, PPC Zimbabwe therefore expects sales volumes to decline by 14 percent to 18 percent compared to FY22.
“The outlook for PPC Zimbabwe remains positive and it is expected that EBITDA and EBITDA margins will continue to recover to the levels of FY22 over the coming months,” it said.
For FY23, PPC Zimbabwe paid US$8,8 million in dividends, an increase from US$6,2 million in FY22. PPC Limited said the bi-annual dividend declarations are expected to continue and grow over time.
PPC Limited said the year under review was characterized by different market conditions in each of the markets in which PPC operates, being South Africa and Botswana, Zimbabwe and Rwanda.
It said in South Africa & Botswana, the market has been affected by a decline in disposable income and the absence of any material increase in demand from infrastructure spending.
“Zimbabwe and Rwanda continue to experience growth in cement demand supported by infrastructure spending and retail demand in both countries.
“The one common factor across the markets has been a significant increase in input costs due to the rise of energy costs globally,” PPC said.
The group said deleveraging continued to be a priority in South Africa & Botswana and PPC expects net debt in South Africa & Botswana to be between R725 million and R775 million at year-end down from R1,075 million at 31 March 2022 and R935 million at 30 September 2022.
Gross debt is anticipated to reach targeted levels by year-end, which would allow for distributions while maintaining gross leverage at 1.3 – 1.5x of the full South African and Botswana operations EBITDA, which includes dividends from Zimbabwe and Rwanda – Harare