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PPC sees lower sales in South Africa in 4Q16

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World Cement,

PPC recorded marginally lower sales in South Africa in 4Q16 compared to 4Q15, the company said in a trading update, as strong volumes in the Western Cape region failed to offset a fall in cement sales in the Gauteng and Inland regions.

Figures for the financial year to date were more positive, however, as the company reported a 4% rise in cement sales for the nine months to December 2016.

Falling sales in Gauteng and Inland regions came on the back of a price rise in October 2016, the company said, and were in the “high-single digit” range. The company is to implement further price rises in selected regions this month to counter a continued slide in average selling prices, which have dropped 4% over the nine months to December.

The South African cement industry has suffered from falling prices for a number of years, following the entrance of new producers into the markets and high levels of imports, as well as intensifying price competition among hardware retailers, Gareth Visser, African Cement, Construction and Consumables Analyst at Avior Capital Markets, told World Cement.

Times may be changing, however.

"We believe that the current price increases will hold given that most of the industry has put through increases during January and February 2017, and we see limited impact on volumes," Visser said.

"The impact of [the price rises] will begin to reflect on the average selling price in the next few months,” PPC said.

The company also said that its SK9 new kiln line project at the Slurry cement plant was “progressing well” with 54% of the project now completed. Commissioning and ramp-up remains scheduled for 1H18.

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