South African cement producer, PPC, has reduced its forecast capital expenditure for 2018 – 2020. The company is currently in merger talks with rival Afrisam, with other companies said to be interested in a possible takeover.
According to an investor presentation posted to the PPC website, capital expenditure will total ZAR2.29 billion – 3.1 billion over the three year period. The original forecast was for the spending of ZAR2.65 billion – 3.3 billion.
Most of the spending will be focused on the current project to install a new kiln line at its Slurry plant in South Africa, where spending will total ZAR1.9 billion – 2.4 billion. Spending in the rest of Africa will be mainly for maintenance and total ZAR400 million – 700 million.
In the last financial year, PPC reported cement revenues up to ZAR5.7 billion in southern Africa and ZAR2.1 billion from its rest-of-Africa operations.
The cut to capital expenditure comes as its shareholders consider a merger proposal from Afrisam, which the company says is undervalued, and may be an attempt by PPC to quell some criticism by analysts of its liquidity position.