PPC Ltd. :PPCLY-US: Earnings Analysis: For the six months ended March 31, 2017 : June 28, 2017

PPC Ltd. reports financial results for the half-year ended March 31, 2017.


  • Summary numbers: Revenues of USD 331.76 million, Net Earnings of USD -0.67 million.
  • Gross margins narrowed from 31.05% to 21.49% compared to the same period last year, operating (EBITDA) margins now 16.50% from 26.06%.
  • Change in operating cash flow of -74.72% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-09-30 2015-09-30 2015-03-31 2014-09-30
Relevant Numbers (Semi-Annual)
Revenues 331.76 356.8 371.13 394.93 455.05
Revenue Growth (YOY) -10.61 -9.66 -18.44 -0.26 -0.53
Earnings -0.67 7.06 33.58 23.83 32.25
Earnings Growth (YOY) -101.98 -70.38 4.12 -49.36 -50.08
Net Margin -0.2 1.98 9.05 6.03 7.09
EPS -0 0.02 0.06 0.04 0.05
Return on Equity -0.23 3.71 29.85 21.9 31.34
Return on Assets -0.1 1.2 6.34 4.68 6.44

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, PPCLY-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if PPCLY-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by -7.02% and earnings by -109.43% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 31.05% to 21.49%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 26.06% to 16.50% in this time frame. For comparison, gross margins were 25.56% and EBITDA margins were 21.90% in the previous period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

PPCLY-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to -61.27 days from -30.75 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

PPCLY-US‘s year-on-year change in operating cash flow of -74.72% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History

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Company Profile

PPC Ltd. manufactures and sells cement, aggregates, metallurgical-grade lime, burnt dolomite, and limestone. The company operates its business through four segments: Cement, Lime, Aggregates and Other. The Cement segment includes the mining of limestone and the manufacture and supply of cementitious products. The Lime segment offers the mining of limestone, and the manufacture and supply of metallurgical grade limestone, burnt lime and burnt dolomite. The Aggregate segment is engaged in the mining and supply of aggregates and metallurgical grade dolomitic limestone. The Other Segment comprises the various consolidated trusts and trust funding relating to the broad-based black economic empowerment transaction. PPC was founded in 1892 and is headquartered in Johannesburg, South Africa.

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