Johannesburg - PPC’s sales volumes in South Africa grew by 6 percent in the first five months of this year, but selling prices declined by 5 percent because of significant pressure on selling prices in the inland region.
The listed cement and lime producer added that overall margins were under pressure despite good cost control and exchange rate gains.
In a presentation posted on PPC’s website to be delivered at the RMB Morgan Stanley Big Five Investor conference in Cape Town starting today, PPC said the volume growth in South Africa was supported by strong double-digit volume growth in the Western Cape.
The group said 8 percent volume growth had been achieved in the key international businesses due to the ramping up of production in Rwanda.
It said volumes in Rwanda had more than doubled at the expected earnings before interest, tax, depreciation and amortisation margin.
PPC said cement imports had dropped by 47 percent year on year in the quarter to end-June and in the Western Cape by 79 percent.
It said 60 percent of the imports over the past 12 months were from Pakistan and the balance from China.
The competitive threat from Chinese cement producers led to a number of local cement producers lodging a dumping complaint with the International Trade Administration Commission (Itac) about cement imported into South Africa from Pakistan. Itac made a final determination in December last year on the anti-dumping duties and imposed duties ranging between 14.29 percent and 77.15 percent on cement imported from Pakistan. This resulted in a significant decline in cement imports into South Africa from Pakistan and the Pakistan government approaching the World Trade Organisation to revoke the anti-dumping rules imposed by Itac.
PPC in the presentation attributed the decline in cement imports to steadily increasing shipping rates while the exchange rate “continued to be a headwind for importers”.
Group's focus
PPC said the focus of the group’s management following its successful R4 billion rights offer, which was concluded last week, would be on its empowerment transaction; the delivery of existing projects in South Africa, the Democratic Republic of Congo, Zimbabwe and Ethiopia; delivery of business plans in the rest of Africa projects; continued management actions in response to risk, compliance and internal controls; and the continuation of the group’s profit improvement programme.
Darryl Castle, the chief executive of PPC, said details of the unwind of the group’s empowerment transaction would be shared with investors “in due course”.
PPC in 2008 implemented its first black ownership initiative, which matures in December.
In terms of the transaction, 15 percent of the shares in PPC were acquired by broad-based partners.
PPC shares fell 3.25 percent to close at R5.95 on Friday.
BUSINESS REPORT