At a recent shareholder meeting, cement company PPC said it hopes to finalise its empowerment deal by March.
Last year the company had had to import 5% of its cement from China and Zimbabwe to meet growing domestic demand but such growth could not continue indefinitely, and sales slowed to 6.6% last year. This year experts are predicting a 5% increase in demand, but PPC’s share price has shed 10% in the past month admittedly amid market carnage.
Chairman Martin Shaw appeared unflustered at the meeting, saying that despite a 1.5% cement sales dip in December, PPC was expecting improved earnings and strong cash flows. He added that Eskom’s erratic power supply was cause for concern, though still hard to quantify. Though PPC itself may be able to ride out the blackouts, the danger is that Eskom’s problems will cause a drop-off in property projects and cement demand. That would be unfortunate, especially as PPC will add 1.25Mt of new capacity at its Batsweledi plant by May, and is upgrading its Hercules plant in Pretoria.
CEO John Gomersall says the new plants will be far more energy-efficient than established plants, which should cocoon PPC to some extent from the electricity supply problems.
PPC says it expects to have finalised by March plans to sell 15% of the company to black investors. This will probably be through an issue of new shares rather than asking investors to surrender stock. When asked by one shareholder why there had been such a delay, Shaw said the original timeframe was unrealistic.