PPC ‘cautiously optimistic’ on demand outlook

South Africa’s leading cement producer, Pretoria Portland Cement (PPC) said it is ‘cautiously optimistic’ about the cement demand outlook for its domestic and Zimbabwe markets.

“Current trends in cement demand and prices should improve results during the first half of our 2012 financial year,” the company said in a statement on Monday.

South African cement producers continued to experience a difficult trading environment last year due to delayed or cancelled government projects and subdued private residential demand. However, improving industry trends, particularly in 4Q11, resulted in the country recording its first rise in demand in four years. Sales for the South African cement industry as a whole increased by seven per cent in the December quarter, compared to the equivalent period in the previous year.

However, cement demand in the Western Cape lagged behind other provinces, impacting on PPC’s South African cement sales. The company had previously said that that while large projects such as the Medupi and Kusile power stations and De Hoop dam continued, these could not compensate for the general lack of infrastructure projects since the FIFA World Cup in 2010. Private sector residential demand, which in 2007 peaked at 50% of cement consumption, also continued at much lower levels.

Chairman, Bheki Sibiya noted in the country’s annual report to the period ended 30 September 2011: “We are encouraged that after almost four years of continuing decline, some leading indicators for cement demand, namely GDP and fixed capital formation are now positive.” Going forward, the company expects growth demand in 2012 to be modest

Meanwhile, PPC’s cement sales in Zimbabwe continued to grow, while sales in Botswana declined owing to a general construction industry slowdown in the country.

Phase 1 of PPC’s Western Cape modernisation project, which entails the ZAR280mupgrade of kiln 6 at its De Hoek factory, was on track for completion in April. The final environmental-impact assessment report for Phase 2 at the Riebeeck factory has been submitted to authorities.

The company confirmed that it would continue to focus on opportunities in sub-Saharan Africa.