Cement maker PPC said full-year profits (headline earnings per share) declined by 93%, which was caused by an “unexpected S&P debt downgrade”.
Shares in PPC have declined by 20.37% in the last three months and fell by 45.57% since May 30 2016, when S&P downgraded PPC’s long- and short-term national scale corporate credit ratings to zaBB- and zaB respectively.
PPC’s share price had declined by 2.5% on Wednesday at 10:50, with a PE ratio of 4.4 and a market cap of R8.6bn.
“PPC endured a challenging financial year, while still delivering on a number of key initiatives and projects during the year,” PPC CEO Darryll Castle said in a statement on Wednesday.
“Our results were impacted by a liquidity crisis precipitated by an unexpected S&P debt downgrade, which resulted in abnormal finance costs being incurred in relation to a liquidity and guarantee facility put in place to ensure that PPC could meet its financial bond repayment obligations.
“PPC’s tax rate was also significantly higher than the prior year, mainly attributable to the non-deductibility of (an) FRS 2 charge related to the BBBEE 1 transaction and forex losses due to exchange rate movements and withholding taxes on dividends in foreign jurisdictions,” he said.
Group revenue increased 5% to R9.6bn, while earnings before interest, tax, depreciation and amortisation were down 13% to R2.1bn in the year ended March 31.
The revenue growth was supported by the rest of Africa cement business, which grew revenue by 9% and the aggregates and readymix segment, which grew revenue by 23%, PPC said.
PPC said it remains well positioned for the medium to long term, notwithstanding the current challenging operating climate.
“The business will continue to focus on mitigating economic and market risks in the regions we operate in, while continuing to optimise the group’s capital and cost structures. This should enable the group to compete efficiently and effectively in all our geographies.”
