Leading cement manufacturer, PPC Zimbabwe’s operations have been weighed down by liquidity challenges, slowing economy and increasing competitive landscape, the company’s Group Chairperson Peter Nelson has reported.
According to Nelson’s statement in the company’s half year report ending 30 June 2017, it has been a turbulent period for PPC due to numerous challenges ranging from falling profitability in an increasingly competitive landscape and a slowing economy coupled with an unending liquidity crisis.
“PPC Zimbabwe remains in debt distress, exacerbated by the lack of a diversified export base and declining terms of trade that make it difficult to adjust to changing world demand for trade-able goods,” said Nelson.
He added that these structural weaknesses have constrained PPC Zimbabwe’s ability to generate the high and sustainable growth required to mitigate debt distress.
“These structural weaknesses have constrained its ability to generate the high and sustainable growth required to mitigate debt distress.
“In addition, the external position is projected to remain under severe pressure in the medium term given poor export and import performance against an appreciating US dollar.
“The Public Debt Management Act, promulgated in September 2015, is expected to strengthen the legal and institutional framework for debt management,” said Nelson.
He further noted that the fiscal space remains constrained due to different capital inflows into the country.
“The fiscal space remains constrained due to under-performing domestic revenues, rising public expenditure, depressed exports, limited foreign direct investment (FDI) and other capital inflows into the country.
“This has undermined development expenditure and social services provisions in both urban and rural areas, exacerbating the incidence of poverty.
“The depreciation of the South African rand against the US dollar has pushed prices of imports from South Africa down and this trend, along with weak domestic demand, tight liquidity conditions and declines in crude oil and global food prices, resulted in negative inflation,” he said.
According to Nelson, the group’s strategic priorities for the next 12 months include debt refinancing, consolidating the company’s projects in Zimbabwe, DRC and Ethiopia while exploring opportunities to de-risk their investment in DRC.
He added that the giant cement producer is finalizing a new black empowerment deal (BEE III) and concluding deliberations on the proposed merger with South African firm, AfriSam.
