PPC aims for sales beyond South Africa to rise to 50%

PPC aims for sales beyond South Africa to rise to 50%
Published: 09 November 2011

Pretoria Portland Cement Co (PPC) said it’s aiming to increase sales from the rest of the continent to 50 per cent in the next five years.

The contribution from Africa, excluding South Africa, has doubled in the past two years to about 20 percent, Chief Executive Officer Paul Stuiver said in an interview with Bloomberg. The Johannesburg-based company plans to boost the proportion to 50 per cent by 2016, he said.

PPC is seeking expansion in new markets on the rest of the continent as growth in Africa’s largest economy has slowed and pricing competition from new entrants has increased.

Outside of South Africa, Zimbabwe and Botswana contribute the most to sales, Stuiver said. Mozambique, Zambia, Ethiopia, Southern Sudan, Kenya and the Democratic Republic of the Congo have also been identified as future growth areas.

PPC is “actively working on” four expansion opportunities into other regions in Africa, Stuiver said. One of these has resulted in a US$44m conditional offer for a 58 per cent stake in Cimenterie Nationale, a government-owned cement producer in the Democratic Republic of the Congo. PPC plans to have local partners in its sub-Saharan Africa projects, said Stuiver, who wouldn’t identify the other countries for projects because of “third-party confidentiality agreements.”

Funding for expansion in Africa may come from South Africa and Europe, he said. PPC may use debt financing so that “demand on cash is not that severe.”

In South Africa, PPC has agreed to buy an initial 25 per cent of Pronto Holdings, a readymix and fly ash supplier based in Gauteng province. The rest of Pronto will be bought by PPC over two years, with the total transaction valued at ZAR280m (US$35m) less debt.