PPC expects "massive growth" in African demand

PPC expects "massive growth" in African cement demand over the next 35 years, driven by a growing population, rising wealth and greater ease of doing business, CEO, Darryl Castle, has said.

The release of PPC's full-year earnings to the end of September 2015, showed that the company has achieved more than 50 per cent of a ZAR400m (US$28m) profit-improvement target announced in May, and a goal of generating 40 per cent of revenue from the rest of Africa by 2017 is “within reach,” it said.

However, headline earnings per share fell 19 per cent, after net profit attributable to shareholders plunged to ZAR698m from ZAR840m last year on lower profitability of the cement business in South Africa.

The full-year result included the newly-acquired Safika Cement and Pronto Readymix and the benefits of its profit improvement programme.

The group said a slowdown in its home market of South Africa – which has been under pressure due to increasing competition, a sluggish economy and low-priced imports – was offset by performances from its operations in Zimbabwe and Botswana and the lime division.

Total cement sales volumes were two per cent down in the period as group revenue rose two per cent YoY. Cost of sales increased by three per cent to ZAR6.4bn, while administration and other operating expenditure rose 10 per cent to ZAR1.1bn. Despite costs being "particularly well managed" by the local cement business, overall costs were affected by consolidation and corporate action costs as well as increased bad debt provisions.

The Zimbabwe business was benefitting from cash-in-hand sales to "people doing their own building", while Botswana operations gained from the government’s countercyclical spending on infrastructure development as mining markets languished.

The company will create a new unit for its expanding non-cement building materials and services operations, which will help further PPC’s African growth plan.