PPC on track to expand into Africa - CNBC Africa

PPC on track to expand into Africa

Earnings

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Cement manufacturer. PHOTO: Getty Images

“Our expansion strategy into the rest of the African continent has gained significant momentum, with identified projects progressing well in a number of countries,” said Ketso Gordhan, chief executive officer of PPC in a statement.

[DATA PPC:PPC LTD.] Group revenue for the year ended 30 September 2013 increased by 13 per cent from 7, 346 billion rand in 2012 to 8,316 billion rand this year due to higher cement sales in Zimbabwe and South Africa as well as the depreciation of the rand against both the US dollar and Botswana pula.

“Cement sales in our ‘home’ territories, particularly Zimbabwe and South Africa, have shown good growth which gives us the confidence and ability to execute our expansion strategy,” Gordhan continued.

PPC’s South African cement sales volumes rose by seven per cent as strong volumes were recorded in the Gauteng and inland regions despite increased industrial action during the period. Volumes in the coastal regions also recorded growth despite rising imports and a particularly wet winter season.

Cement sales in Zimbabwe recorded double-digit growth for the same period, with retail demand remaining the key driver. The group stated however that increased competition in the region has constrained cement price increased.

The group’s strategic objective to “keep the home fires burning” was also driven by the purchase of a majority stake in the South African based Safika Cement Holdings, a blended cement producer with a 20 million bags of cement per annum capacity.  

The company also declared a final dividend of 118 cents per share which increased their year’s total dividend by seven per cent to 156 cents per share.

On the other hand, exports to Mozambique were reduced due to logistical challenges posed after floods damaged the rail line between South Africa and Maputo.

Nonetheless, the group stated that they have continued to pursue their ‘rest of Africa’ strategy by increasing their investment to 16 million rand towards Ethiopia’s Habesha Cement Company while also purchasing a majority stake in Rwanda’s CIMERWA Ltd.

The company believes that growth is needed in the South African economy to improve the demand for their products. However, they are confident that they are well positioned in a challenging market and are on track to reach their strategic objective of generating 40 per cent of their revenues from the rest of Africa by 2017.

“We remain confident about prospects for strong growth in the rest of Africa. We believe we are on track to meet our strategic objective of generating 40 per cent of our revenues from the rest of the continent by 2017.”

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