Slowing demand in South Africa

Pretoria Portland Cement (PPC) said its overall results were in line with forecasts, despite slower demand in cement and Eskom's rolling power cuts.
"Overall our results are in line with our expectations, and we continue to look forward to a year of improved earnings and continued strong cash flows," a spokesman for the group said in a note to the Johannesburg Stock Exchange.

Although cement demand slowed during the first quarter, it still expected regional demand to reflect positive growth for the current year, but at a lower rate than in prior years. This follows a number of years of double-digit growth, which have seen total cement demand increased to over 15Mta.

"A combination of heavy rains, both in the summer rainfall area and un-seasonally in the eastern and southern Cape, and a number of construction companies closing earlier than anticipated for the annual shutdown, resulted in industry sales for December in particular, being 1.5% lower than the prior year on a sales per day basis," the group said.

The implications of the recent power generation problems were cause for concern, but the group had not quantified the financial impact on its business, it said.

The Batsweledi expansion project at Dwaalboom was nearing completion with hot-commissioning of the plant on track for April/May 2008. Commissioning of completed sections of the plant had already commenced and the project remained within budgeted cost. The Hercules mill project was progressing according to plan. Environmental and other regulatory approvals required for the Riebeeck West cement expansion project in the Western Cape were in progress.

Lime and aggregate operations also reflected improved profitability in line with PPC expectations.

Finalisation of Black empowerment transactions were also progressing well, with all parties currently completing their review of the many and complex matters involved. A target of end March 2008 had been set for distributing the circular to shareholders.