PPC’s profit falls, mulls Zimbabwe stake sale

PPC’s profit falls, mulls Zimbabwe stake sale
Published: 09 November 2010

Pretoria Portland Cement (PPC) Africa’s largest maker of the building material, said its full- year profit declined after South African cement demand fell for a third year.

Net income for the 12 months through September fell to ZAR1.01bn (US$148m) from ZAR1.02bn a year earlier, the company said in a statement today. Sales were little changed at ZAR6.8bn.

Cement volumes in South Africa, Botswana and Zimbabwe fell seven per cent during the period, mirroring a drop in construction in the region, PPC said. New infrastructure projects in South Africa have been delayed while residential building has not recovered following the global recession.

“We remain concerned about the outlook for cement demand in the short term,” Chief Executive Officer Paul Stuiver said in the statement. PPC “is well positioned to benefit from the medium to long-term recovery.”

Low cement demand has led to listed cement and lime producer Pretoria Portland Cement (PPC) developing a strategy to move into other “much more exciting markets” in sub-Saharan Africa.
Mr Stuiver said yesterday that these markets included Mozambique, Zambia, Angola, the Democratic Republic of Congo, Tanzania, Kenya and Uganda, which had not yet reached the level of infrastructure development evident in South Africa.

He said: “Huge demand is coming at some stage in the future when these countries develop their infrastructure. We are excited about them because they are higher growth areas than South Africa in the longer term.”

Meanwhile, the company has said it would consider selling a stake in its Zimbabwe unit to comply with an indigenisation law. Mr Stuiver told Reuters in an interview that the group would sell a stake in the unit, Portland, to black investors to comply with a black ownership law in Zimbabwe, assuming it makes commercial sense. Zimbabwe’s government published regulations earlier this year that would force foreign-owned firms to sell 51 per cent of their shares to to black Zimbabweans.

Mr Stuiver also said the group was looking for expansion opportunities in Mozambique and in other southern African countries.