PPC cements market share as rivals crack: HY sales volumes are up 44%, revenue 70% higher

PPC Zimbabwe’s cement sales volumes rose by 44% in the six months to September, as the company recovered from last year’s maintenance shutdown to take advantage of rising demand and low output from rival Khaya Cement.

The country’s biggest cement company saw revenue rise 68.6% to US$93.3 million. While traders doubled the price of cement due to shortages recently, PPC only increases its prices twice a year; the group averaged a price increase of 8.8% over the half year. This shows that the revenue growth was driven by volumes, and not any price hikes by PPC. Demand is being driven by “residential construction and government-funded infrastructure projects”, PPC says in its latest financials for the half-year.

Last year, PPC shut down its kiln, the primary part of the cement manufacturing process. This saw the company losing some market share to imports and rivals. This has changed after the plant came back online this year. Mokate Ramafoko, PPC’s group MD for Industrial and Innovation, estimates that PPC holds over 60% market share. Khaya Cement, the country’s second-biggest cement producer with an estimated 16% of the market, has struggled with mill breakdowns. These have left Khaya unable to serve the market, and PPC has had to up production to close the gap.

“One of the key features of our performance last year was the loss in market share because of the extended shutdown we had in the kiln. We have finally recovered our market share, we are averaging over 60% of market share, estimated,” Ramafoko told analysts on Monday.

The withdrawal of some cement import licences also helped PPC push up volumes, including in the north of the country, traditionally dominated by Khaya and imports. Added Ramafoko: “We have seen some of the challenges in the north (of Zimbabwe) with our competitors, which helped us to increase volumes. For the first time in the history of (PPC) Zimbabwe, the northern region supplied more volumes than the southern region because of the withdrawals of the import licences. We are also seeing very strong retail demand.”

PPC Zimbabwe has been a profitable investment for PPC Africa. In July, PPC Zimbabwe repatriated a dividend of US$4 million to PPC Africa. Another US$7 million dividend has been declared in November.

Zimbabwe’s market continues to suffer a shortage of clinker, the raw material used to make cement. PPC had to import 95,000 tonnes of clinker over the period to support growing demand, more than the 35,000 tonnes from the same period last year. Government now allows companies and individuals to import cement, but restrictions of five tonnes for each importer by December mean that soaring demand remains unmet. According to industry players, Khaya plans to import some cement from Zambia’s Sinoma Cement, but faces a large haulage bill that may make it unviable. The company installed a new plant last year, meant to double capacity to one million tonnes per year. However, production from the quarry, the mill and the kiln have remained below plan.

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