Operations in Africa help lift cement maker

PPC says group revenue in the first quarter ended June 2017 is ahead of turnover in the previous comparative period in 2016.

This pushed the share up 9.17% to R3.49 on the JSE on Thursday. Meanwhile, earnings before interest, tax, depreciation and amortisation was in line with the R574m previously.

“Our focus is firmly on delivering improved profitability and liquidity in the shorter term, while our longer-term strategy remains unchanged,” interim CEO Johan Claassen said on Thursday. “More specifically, we will focus management efforts on new operations in the Democratic Republic of the Congo [DRC] and Ethiopia, ensuring that they deliver to expectations, while further optimising efficiency in our other businesses.”

Claassen had recently taken over from former CEO Darryll Castle, who resigned suddenly at the end of July.

PPC had said that to ensure a smooth handover, Castle would still be “available to the group” for a period of six months.

PPC has recommenced formal talks with rival cement producer Afrisam to assess the merits of a potential merger.

This comes as competition in the industry is red-hot with the arrival of Chinese and Nigerianbacked newcomers. The proposed deal would create a South African-owned cement producer that was financially stronger, operationally more efficient and had deeper technical capability, PPC had said.

The company’s share had lost two-thirds of its value in the past year as it ramped up plants elsewhere in Africa including in Rwanda, Ethiopia, the DRC and Zimbabwe.

The group said its net debt position in June 2017 had improved on March 2017. It had “come to the end of the high capex phase” and was generating positive free cash flow — before financing activities.

“In the rest of Africa, the robust growth in Rwanda has continued,” Claassen said.

“Cement sales volumes in the DRC are improving notably, following a slow start although market conditions in the country remain challenging.

“Our Zimbabwe operations continue to exceed expectations, with the investment in the Harare mill contributing to volume growth.

“The South African business environment remains challenging, with continued lower levels of fixed investment and consumer spend,” he said.