Roy Cokayne
THE business development team of PPC is working “flat out” to identify further projects for the listed cement and lime producer’s African expansion strategy.
PPC has a target of generating 40 percent of its total revenue from outside of South Africa by 2017, compared with 28 percent now.
Darryl Castle, the chief executive of PPC, yesterday said that they remained confident of meeting this stated objective by 2017 from the company’s existing suite of African project, but PPC had to fill the project pipeline “for the next decade”.
PPC has four projects in Africa in Rwanda, the Democratic Republic of Congo and Ethiopia, while a memorandum of understanding with partners on a project in Algeria had expired.
Debt
Castle said PPC’s debt would peak at between R10 billion and R12bn in 2017 and de-gear quite quickly after that. If PPC was to embark on new projects in 2017 and 2018, it needed to identify them soon and needed several of them, he said.
Castle said cold commissioning of the new 600 000 ton plant in Rwanda began in March this year and cement production was scheduled to commence in the second half of this year. Its projects in both the DRC and Zimbabwe were both under construction and remained on budget and on time, with production anticipated towards the end of next year. However, the previously communicated costs and timeline of the Ethiopia project would be exceeded.
PPC’s South African cement sales volumes rose 4 percent in the six months to March.
Excluding the contribution of recently acquired Safika Cement, volumes in the core business declined by 3 percent, while selling prices dropped by 2 percent.
Castle attributed the volume decline mainly to poor economic growth, increased cement imports and local competition. PPC yesterday reported a 38 percent decline in headline earnings a share to 60c in the six months to March from 96c in the previous corresponding period.
Consolidation
Group revenue rose by 9 percent to R4.54bn from R4.157bn on the back of higher volumes in Zimbabwe, Botswana and Rwanda and the consolidation of sales from Safika Cement and Pronto Readymix.
Operating profit, excluding the impact of empowerment transaction charges and restructuring costs, fell by 11 percent to R789m from R884m, with the operating margin deteriorating to 17 percent from 21 percent.
Cash generated from operations grew by 46 percent to R1.14bn from R780m. A reduced dividend a share of 24c was declared.
PPC shares on the JSE rose 7.07 percent to R18.92.