PPC gives good returns

South Africa: PPC has delivered a 140 per cent total return to shareholders over four years. The share price has rocketed from a low of R30,50 in 1998 to a record high of R155 this month.  On top of normal dividends, the group has declared special dividends consecutively in the past three years. Total distribution to shareholders in this period exceeds R1.2bn.

CEO John Gomersall and MD John Blackbeard have always underplayed the role of executive management in this veteran cement company. "Our people have been great to us," says Blackbeard. "They give us an extra edge." But PPC’s people-focused management was lifted from parent Barloworld, which prides itself on an approach known as Value Based Management, complemented by huge expenditure on modernising technology. Operations to neighbouring countries have also been expanded, which would be critical in limiting shocks from the local economy.  Since then, there has been sustained improvement in operating margins: 14,5% in 1999 to 28,7% in 2003. While the number of employees has remained relatively flat since 1999, revenue per employee has almost doubled.  According to the Cement & Concrete Institute, SA cement demand rose by 7% last year. But PPC’s domestic sales recorded double-digit growth, meaning that the group is capturing a relatively bigger slice of a bigger cake.