PPC eyes longer-term growth outside of Africa

PPC eyes longer-term growth outside of Africa
16 March 2016

PPC has unveiled a new expansion strategy that envisages doubling the business every 10 years and growing beyond its traditional markets in Africa.

In an investor presentation posted on PPC's website ahead of this week’s Merrill Lynch conference in Sun City, the company set out its ambitions for the future even as it warned of falling cement sales in the first months of FY16. 

In the presentation, PPC states that it is on course to raise capacity to 12.7Mta by 2018 (a 47.7 per cent increase on 2016), with new plants in South Africa, Rwanda, the Democratic Republic of Congo and Ethiopia and a new mill in Zimbabwe. PPC says that it is committed to maintaining its share of the growing African market, but in the longer-term plans to expand further afield. At the same time the firm states it will diversify away from cement while growing volume sales.

Despite this optimism, cement sales volumes were down one per cent for the first five months of FY16. This was due to poor performance outside PPC’s home market in South Africa where volumes grew by two per cent against a backdrop of declining prices. The company also warned of “significant pressures” on sales prices, including a five per cent fall in South Africa, although here it noted that prices had stabilised in recent months. 

This trend was no doubt encouraged by the imposition of anti-dumping duties on cement imported from Pakistan which had contributed to a 62 per cent YoY fall in import volumes in the final quarter of 2015, the company noted. 

Cement demand in South Africa would grow at between 4-6 per cent a year to 2018, PPC predicts, but admits that other indicators, such as GDP, are markedly less positive.

In other markets, PPC reported that volume sales fell by three per cent. In particular, it reported reductions of more than 10 per cent in both Botswana and Zimbabwe, as well as price falls of around 10 per cent in the latter. Prices in the Democratic Republic of Congo, where PPC is on course to commission a 1Mta plant by the end of 2016, were also down due to imports from China, Turkey and neighbouring Angola. 

In Rwanda PPC stated that its 0.1Mta CIMERWA plant has been completed on budget and that sales in the year to February had reached 100,000t. The company confirmed that its 0.7Mta mill in Zimbabwe would be commissioned towards the end of 2016, while its 1.4Mta plant in Ethiopia was on course to come on-stream in the 2Q17 and the 1Mta kiln in Slurry, South Africa, would enter service in 2018.

Published under Cement News