PPC has acquired the remaining 50 percent shareholding in Gauteng readymix and fly ash supplier Pronto Holdings it did not already own and reported that its expansion into Africa remained well on track and further growth opportunities continued to be investigated.
Bheki Sibiya, the chairman of the listed cement and lime producer, said yesterday that it had paid a total of R460 million for 100 percent of Pronto.
Sibiya added that construction on its new plant in Rwanda was progressing well, with commissioning expected early next year, while construction work continued at its sites in Ethiopia and the Democratic Republic of Congo (DRC).
Construction had also begun on its 1 million-ton-a-year cement plant in Zimbabwe, while detailed feasibility studies were continuing on its planned project in Algeria, Sibiya said.
PPC reported in February that advanced plans were in place to enter the Algerian cement market through a partnership with Algerian private sector investors in Hodna Cement Company and the acquisition of a 49 percent stake in the Algerian company for an undisclosed amount, which would allow it to assume management control of the company.
It said Hodna would build a 2 million-ton-a-year plant for about $350m (R3.85 billion) in the Hodna area, about 300km east of Algiers and close to the university- and technology-focused town of Setif.
PPC, together with local partner the Barnet Group, is building a $230m, 1 million-ton-a-year cement factory and associated quarry in the DRC.
In 2012 the South African firm acquired a 27 percent stake in the Habesha Cement Share Company in Ethiopia for $12m and 51 percent of Cimerwa of Rwanda for $70m.
The second-phase development of the Habesha cement plant involves doubling the capacity oto 2.8 million tons a year at a cost of $130m.
PPC’s strategy on the continent is to generate 40 percent of its total revenue from outside South Africa by 2017, compared with 26 percent currently.
Sibiya added yesterday that slow economic growth and a lack of infrastructural investment, coupled with increased competitor activity and rising imports, had made the trading environment in South Africa particularly tough.
“Countering the low single-digit volume declines recorded in all areas around the country, selling prices have increased marginally against the same period last year,” he said.
Sibiya said the Safika Cement business, which was acquired in December last year, was performing in line with expectations and both this business and Pronto had supported PPC’s “Keeping the Home Fires Burning” strategy in South Africa through their positive contributions to the group’s earnings.
The Zimbabwean market recorded modest volume growth but volumes and prices fell in Botswana.
However, group export volumes to the rest of Africa had shown good growth, particularly out of the Western Cape into the DRC, where PPC was starting to establish a market while it built its plant there.
Sibiya said the performance in the lime division had been affected by lower offtake from the steel and alloys industries and reduced export demand, resulting in single-digit volume declines.
But the aggregates divisions, both in South Africa and Botswana, had achieved pleasing volume growth.
Investment banking group Imara SP Reid forecast last week that PPC’s expansion of its operations into the rest of Africa would result in it becoming a favourite with investors.
PPC’s shares added 3c to end at R33.08 yesterday.