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Cimerwa results help cushion Pretoria Portland Cement

Saturday July 02 2016
RwandaCIMERWA

Cimerwa Ltd helped Pretoria Portland Cement cushion its turnover in the six months ending March 31, 2016. The Johannesburg Stock Exchange-listed firm has a 51 per cent stake in the Rwandan cement maker. PHOTO | CYRIL NDEGEYA

Cimerwa Ltd helped Pretoria Portland Cement cushion its turnover in the six months ending March 31. The Johannesburg Stock Exchange-listed firm has a 51 per cent stake in the Rwandan cement maker.

Pretoria Portland Cement’s results show its bases in Botswana, Zimbabwe and South Africa were depressed due to a shrinking market and falling cement prices in Southern Africa caused by low commodity prices.

“The recently commissioned plant in Rwanda added almost R200 million ($13.4 million) to the revenue. This reflects the importance of an increasingly diverse operating base,”  a statement from Pretoria Portland Cement said.

Although group revenues dropped by one per cent to R4.5 billion ($304.3 million), the results released on June 14 show that Cimerwa Ltd contributed significantly to the top line.

“In the absence of Rwanda’s contribution, group revenue would have declined by five per cent,” said Darryll Castle, CEO of Pretoria Portland Cement in a statement, adding, “Since the plant’s commissioning, it has sold 124,000 tonnes of cement; this gradual ramp-up will continue and the plant should reach planned capacity over the next two years. Plant performance for the review period was satisfactory and further business improvements are expected once current initiatives are implemented.”

The group’s earnings before interest, taxes, depreciation and amortisation went up two per cent to R1.1 billion ($72 million). Net profit attributable to shareholders rose by 35 per cent to R369 million ($24 million) from R274 million ($18 million), supported by the sale of non-core assets.

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The company’s South African operation’s earnings before interest, taxes, depreciation and amortisation fell nine per cent to R624 million ($41 million).

Its Rwandan operations are however dogged by smuggling, which could drive down the company’s earnings.

“The smugglers are able to sell at discounted prices because they do not pay export duties. Besides, they are exporting subsidised cement meant for the local market, holding back Cimerwa’s export sales targets,” said Cimerwa chief executive officer Busisiwe Lagodi at a meeting with Rwandan government officials in Kigali.
Though the specific volume and value of cement smuggled is not known, the racket, which is said to be masterminded by Rwandan and Democratic Republic of Congo businessmen, has continued unchecked, putting exports under pressure and affecting the pace of growth in the cement sector.
Rwanda spent over $82 million on cement imports in 2015.

Uganda-based Hima Cement and Tororo Cement and Tanzania’s Kilimanjaro Cement are among regional firms looking to benefit from Rwanda’s growing demand for cement products.

Pretoria Portland Cement invested $165 million to increase Cimerwa’s capacity from 100,000 tonnes to 600,000 tonnes per annum, but industry players estimate that the plant is operating at only 60 per cent capacity.

The plan is to support the plant to reach 80 per cent utilisation of capacity which means production should attain 600,00 tonnes per year of the 720,000 tonnes per year installed capacity.

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