South Africa-based cement manufacturer PPC has released a trading statement for the October – December 2014 quarter. The forecast financial information on which it is based has not been reviewed by the group’s auditors. Highlights from the statement are provided below:
Expansion
- PPC is continuing its expansion strategy in Rwanda, Zimbabwe, Ethiopia and the Democratic Republic of Congo. Further opportunities are also being pursued, and according to the company ‘further announcements may be made in the near-term’.
- Production at the 600 000 tpy plant in Rwanda is due to begin in 2H15. At present, the civil and mechanical construction has been completed and just the electrical installation is pending finalisation.
- The company is currently finalising the transaction to increase its stake in Ethiopia’s Habesha Cement Company to 51%.
- PPC’s Board is ‘considering the merits’ of the merger proposal from AfriSam.
Cement sales
- Sales growth in Zimbabwe and Botswana, along with the consolidation of Safika Cement, helped PPC to achieve positive sales volumes for the period.
- If Safika Cement is excluded, the group’s cement sales volumes demonstrated single-digit contraction when compared to the corresponding period in 2013 on a like-for-like basis.
- Weak economic growth, power shortages and greater competitor activity are listed as challenging factors in South Africa’s domestic market.
Lime, aggregates and ready-mix
- An improved performance has been reported for the lime division, boosted by new business and higher take-off from the steel and alloy industries.
- Reduced demand from project-related customers has affected PPC’s aggregates business.
- Pronto Readymix, which was consolidated from July 2014, has made a positive contribution to the group’s quarterly results.
Outlook
- Operating conditions in South Africa are expected to remain a challenge but PPC has implemented strategies to limit the impact of this on the group.
- New infrastructure projects in Botswana, Zimbabwe and South Africa could help to boost demand for cement in the region.
- A subsequent trading statement released by the company indicates that its headlines earnings per share for the six months to 31 March 2015 are expected to fall 25 – 45% on the corresponding period ending 31 March 2014. This has been attributed to a one-off tax credit in the previous reporting year, higher finance costs this year and a weaker trading environment.
Adapted from press release by Louise Fordham