(Adds details, CEO quote)
JOHANNESBURG, June 7 South African cement maker
PPC reported a 93 percent plunge in full-year earnings
on Wednesday due to a liquidity crisis following a cut in its
credit rating to junk status by S&P Global Ratings.
Shares in PPC have fallen more than 26 percent since May
2016, when S&P cut the company's long- and short-term South
African national scale corporate credit ratings to zaBB- and zaB
respectively and placed all credit ratings on CreditWatch with
"PPC endured a challenging financial year, while still
delivering on a number of key initiatives and projects during
the year. Our results were impacted by a liquidity crisis
precipitated by an unexpected S&P debt downgrade," said chief
executive Darryll Castle.
The downgrade resulted in a higher interest charge and tax
rate as well as "abnormal" finance costs related to a liquidity
PPC, which is negotiating a possible merger with rival
Afrisam, said headline earnings per share fell to 7 cents from
107 cents in the comparable period the year before.
Shares in PPC were down 2.9 percent to 5.43 rand at 0719
Group revenue rose 5 percent to 9.6 billion rand ($748
million), supported by the "rest of Africa" cement business,
while the group's core profit or earnings before interest, tax,
depreciation and amortization decreased 13 percent.
PPC, which makes 70 percent of its revenue from South
Africa, said sales volumes rose by 2 percent in its local
In a challenging financial year, PPC completed a number of
its projects as it looks to diversify its portfolio.
The company, which has pushed deeper into the rest of Africa
as profit has slumped in its domestic market, said the
commissioning of a Zimbabwe mill and projects in Ethiopia and
Democratic Republic of Congo (DRC) increased its cement capacity
by 33 percent to 11.4 million tonnes per annum.
"I believe we have reached the bottom of the pricing cycle
in South Africa and am looking forward to the ramp up of our new
operations in the DRC, Ethiopia and Zimbabwe which will grow our
operating base and further diversify our earnings," Castle said.
PPC said the group and Afrisam were currently "conducting
due diligence work related to a possible merger of the two
entities" and no definitive conclusions had been reached.
($1 = 12.8423 rand)
(Reporting by Nqobile Dludla; Editing by Sunil Nair and Mark