AFTER THE CURRENT DECLINE in South Africa’s residential homebuilding sector, PPC is keeping its blood pumping courtesy of Government’s R600bn infrastructure spend, including low-cost housing. The cement manufacturer has been fortunate to focus on more than one area, so when one performs badly the other compensates for it.
PPC also operates in an environment with a desperate shortage of homes – cement products are always in demand. PPC said earlier this month that “low-cost housing could be the single largest area of demand going forward”. So demand for cement to build rural and affordable housing is expected to continue as Government plans to eliminate SA’s housing backlog by 2014.
By then, interest rates should have pulled back and the world’s economies recovered from the current credit crisis. If that’s combined with positive consumer sentiment, a turnaround in the residential building sector plus growing demand will create momentum for companies such as PPC.