PPC expects up to 65% increase in FY18 net profit, but lower Ebitda
Cement producer PPC expects its net profit attributable to shareholders for the financial year ended March 31 to increase by 55% to 65%, compared with the R93-million achieved for the prior comparable period.
Earnings before interest, taxation, depreciation and amortisation (Ebitda) from operations is, however, expected to decline by 5% to 12% year-on-year, as a result of costs related to corporate action, restructuring and separation costs.
Excluding this impact and the fluctuation in exchange rates, group Ebitda is expected to rise by 0% to 3%.
In addition, PPC reported that its manufacturing plant in the Democratic Republic of Congo (DRC) was commissioned during the last quarter of calendar year 2017, while the plant in Ethiopia was commissioned in the first quarter of the 2018 calendar year.
“Their results for financial year 2018 have reduced net profit as they are in a ramp-up phase. The DRC market continued to face uncertainty driven by political instability, lower cement demand and subdued selling prices.”
“Further, the competitive landscape remains challenging owing to production capacity that is higher than market demand. The delayed elections have created uncertainty in the economy and most of the infrastructural projects have been put on hold or they are slow to come to market. As a result of these factors, management undertook an impairment assessment,” stated PPC.
Following the impairment assessment review, the recoverable amount of the DRC operation was considered lower than the current carrying value and an impairment of R166-million was charged against property, plant and equipment.
Meanwhile, basic earnings a share are expected to increase by between 20% and 30% year-on-year, while headline earnings a share are expected to increase by between 110% and 120%.
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