Corporate interest in PPC is just opportunistic
PPC, THE LISTED cement and lime producer, views the increased interest from other companies in merging or acquiring a significant stake in the company as opportunistic.
Johan Claassen, the interim chief executive of PPC, said that the company was very well positioned to deliver “proper shareholder value in the near term” after significantly growing its asset base outside South Africa over the past few years.
“We have a very well developed footprint in Africa and all these assets are slowly but surely ramping up to meaningful capacity.
“We are market leader in 80 percent of the areas that we operate in and over the past few months have deleveraged our balance sheet and improved group liquidity,” he said.
Claassen added that the interest in PPC from other companies was also probably because it was undervalued in terms of its share price on the JSE.
“You can perceive PPC as a good buy, because we haven’t realised the benefit of our four big investments outside South Africa. Everybody would like to get a bit of upside quite quickly and so from that perspective there is some element of opportunism about it (the offers),” he said.
Claassen said PPC could also be regarded as a smallish regional Johan Claassen, PPC interim chief executive, says the company is well positioned.
player in the context of the cement world and, as a listed entity, probably provided a good platform for an interested party to expand into or get an African portfolio.
PPC’s independent board this week recommended that shareholders should reject the partial offer from Fairfax Africa, which was also conditional on PPC merging with AfriSam.
Its independent board is continuing to engage with LafargeHolcim and Dublin-based CRH, the diversified international building materials company listed on the London, Dublin
and New York stock exchanges.
Tryphosa Ramano, chief financial officer of PPC, said the company had invested more than $750 million (R10.43 billion) in new capacity since 2014 and was well positioned to deliver sustainable returns.
Ramano said PPC was operating in three countries in 2011, but that had doubled to six countries. Its cement capacity had increased by 33 percent to 11.4 million tons per annum (mtpa) from 8.0mtpa, total assets had grown 2.8 times to R18bn from R6.4bn, total equity had increased 8.8 times to R8.4bn from R0.96bn and the earnings before interest, tax and amortisation (Ebita) from the rest of Africa operations had grown 2.1 times to 35 percent from 17 percent.
“That just tells you what we have been through in those few years. There is a lot of vultures looking at us, because they have seen we are rich… and we are now about to benefit from our new assets,” she said.
Claassen believed PPC had produced a good set of results in the six months to September, adding that everything was moving in the right direction, despite the difficult operating environment.
PPC yesterday reported a 36 percent improvement in headline earnings a share to 19 cents from 14c. Group revenue rose by 1 percent to R5.18bn from R5.16bn.
Total cement volumes increased by 2 percent to about 3 million tons.
There was a strong performance from the rest of Africa, with Ebita growing by 25 percent to R422m.
Attributable net profit was 188 percent higher at R294m compared to R102m in the prior period.
Net cash flow from operating activities increased by 49 percent to R870m.
A dividend was not declared. Claassen anticipated PPC would resume dividend payments within the next 18 months.
PPC shares rose 3.03 percent yesterday on the JSE to close at R6.80.