PPC sees marginal improvement in sales

PPC sees marginal improvement in sales
Published: 07 November 2011

South African sales in September rose 12.7% YoY and while sale in the year are up 2.1%, the industry is still reeling from the effects of the global recession and slow building and construction markets.

Recently, PPC CEO Paul Stuiver said the country’s larger cement producers had not seen any benefit from the government’s promised infrastructure spending.

The industry had production capacity of about 16Mta, while demand had fallen to less than 12Mta.

Cement overcapacity has also been made worse by the entry into the South African market of both Nigerian-backed Sephaku Cement, and a Chinese-backed empowerment entity, which will bolster production by nearly 5Mta.

According to the latest figures from the Cement and Concrete Institute of SA, monthly cement demand in the country rose 10.2% YoY to June, fell slightly in July, but rose 4.6% in August, and 12.7% in September.

However a slew of poor results from the construction industry belies the notion that the market is improving. Last week SA’s largest construction company, Aveng, reported continued uncertainty in the global economy, and slower than expected domestic recovery.

Aveng CEO Roger Jardine said despite the company’s better-looking order book, SA’s construction sector remained and very quiet and the lack of public spending on infrastructure was marked.

PPC recently said demand improved marginally during the second half of the year but the Western Cape lagged the rest of the country. The province, which accounts for about a fifth of the company’s business, has seen a 50% plunge in building and construction projects since their peak in mid-2007, although it is going ahead with capacity expansion there.