PPC expects positive sales growth in 2H

PPC expects positive sales growth in 2H
Published: 15 July 2011

South Africa’s cement industry was beginning to show some signs of a possible recovery, with recent industry sales figures showing that the rate of contraction was slowing, Pretoria Portland Cement (PPC) said on Thursday, adding that it was still forecasting a growth in sales for the second half of 2011.

But executive for corporate strategy and communications Kevin Odendaal said the difficult business environment in South Africa’s construction and building sectors continued to place strain on the cement industry and on the sales outlook.

Sales volumes fell by 4% year-on-year from October 2010 to March 2011, which was the smallest rate of decline for a six-month reporting period since September 2008. More recent trends were also positive, with the Cement and Concrete Institute reporting that monthly cementitious product sales for June increased by 10.2% over sales recorded in June last year.

“It is too early to say if this is the bottom of the cycle, but there are definitely signs of recovery and this is in line with our view that the cement industry will experience positive growth in the second half of the year,” he explained.

The dynamics of the market, particularly with higher production capacity versus demand, have resulted in increased levels of competitiveness in the market.

PPC has responded by beefing up its operations and products and said that it was also beginning to reap the benefits from energy-efficiency investments at its Hercules operation, in Pretoria. The investment has so far helped to shave almost 5% off its electricity costs.

Overall the group has invested some ZAR700m at the plant, where it had also expanded its cement milling capacity. The new clinker grinding facility would also increase output.

The company has also installed an energy efficient vertical roller mill, a clinker silo and a duo-cell cement silo with bulk road loading facilities. The vertical roller mill, together with the remaining milling capacity is estimated to produce an electrical energy saving for each ton of cement produced of around 15%.