Double-digit cement demand growth continues according to Pretoria Portland Cement Ltd (PPC) who released their interim results for six months to March.
National demand growth of more than 13% over the comparable period last year has been spurred along by the buoyant domestic economy. The ongoing surge in building activity, especially in the residential sector, has been occasioned by the favourable interest rates.
“Although the growth in the residential sector appears to be slowing slightly, increased infrastructural investment should more than offset this over the next few years,” said John Gomersall, chief executive officer of PPC.
These conditions bode well for future cement demand. The country’s leading cement producer expects national demand to grow by around 12% for the current financial year. PPC, however, remains cautious.
“South African annual cement demand has grown by almost 50% from 9.5 million tons in 2002 to an expected 13Mt this financial year. Consequently, PPC’s capacity utilisation has increased sharply which has resulted in the recent high rate of earnings growth,” says Gomersall.
“While this is welcomed, it followed two decades of significant excess and un-utilised capacity with resultant low earnings and returns,” added Gomersall. “However, as we approach full capacity, the rate of earnings growth may slow, until the increased output from the Batsweledi project becomes available in mid 2008.”
Board approval has also been granted to accelerate the plans to expand and modernise the capacity in the Western Cape, complementing the capacity upgrades underway in the Inland region. In addition the planning phase of a significant state-of-the-art cement milling facility in the Inland region is in process.