PPC, SA’s largest cement maker, expects a 40-60 per cent jump in interim headline earnings a share on the back of better-than-expected sales and a reduced tax bill. The company, which is 71 per cent owned by industrial group Barloworld, said yesterday that for the fourth consecutive year, cement sales were surpassing its forecasts.
The cement maker had expected the market to grow by about 8 per cent in the current financial year. But a construction sector analyst said that cement sales growth in the first three months of the financial year was close to 12 per cent higher than in the corresponding period last year.
PPC chairman and Barloworld CE Tony Phillips said at the cement maker’s AGM yesterday that production facilities ran at high utilisation levels resulting in “a further improvement in the cement operating margin”. Combined with improved trading conditions, headline earnings a share to March 31 this year are expected to be between 40 per cent and 60 per cent higher than last year,” the group said. The group expected a further strengthening of operating cash flow “due to the improved trading conditions”.
The domestic cement market expanded by a record 17.4 per cent in 2004. The rate of growth was expected to come off the record high but to continue to grow strongly. Three of the four large cement makers in SA have embarked on expansion plans, worth about R3bn combined, in response to the unexpected growth spurred by the interest rate-driven building boom.