Rain damps January, February sales
CEMENT producer PPC has said adverse weather negatively affected cement and concrete sales in South Africa during January and last month. PPC was providing an operational update which reflected that rainfall in excess of 200mm was experienced in many parts of the country during these two months. The leading supplier of cement in southern Africa said it managed to reduce net debt further to R4.4 billion as at December due to the conclusion of a component of the first empowerment transaction. PPC concluded a Strategic Black Partners and Community Service Groups components of its 2008 broad-based black economic empowerment transaction, resulting in a cash inflow of R1 billion in December. The improved balance sheet would mitigate the adverse impact of the cyclical nature of the business, and that business continued to generate superior cash earnings despite capital expenditure requirements. The company has also provided an update on retail selling prices of cement in key geographies. PPC said retail selling prices in most African countries had been declining on the back of increased cement capacity as well as lower economic growth. The prevailing price of cement at retail stores has declined by about 28 percent in the Democratic Republic of the Congo on the back of an influx of imports and the entry of a new producer in the local market. PPC said pricing in the DRC was expected to normalise once the government’s cement import ban was reinstated. The lower realisable retail selling prices of cement imply lower factory gate prices, which will put pressure on margins in these territories. – ANA