The Star Late Edition

PPC increases volumes while prices fall lower

- Roy Cokayne

PPC’S sales volumes in South Africa grew by 6 percent in the first five months of this year but selling prices declined by 5 percent because of significan­t pressure on selling prices in the inland region.

The listed cement and lime producer added that overall margins were under pressure despite good cost control and exchange rate gains.

In a presentati­on posted on PPC’s website to be delivered at the RMB Morgan Stanley Big Five Investor conference in Cape Town starting today, PPC said the volume growth in South Africa was supported by strong double-digit volume growth in the Western Cape.

The group said 8percent volume growth had been achieved in the key internatio­nal businesses due to the ramping up of production in Rwanda.

It said volumes in Rwanda had more than doubled at the expected earnings before interest, tax, depreciati­on and amortisati­on margin.

PPC said cement imports had dropped by 47percent year on year in the quarter to end-June and in the Western Cape by 79percent.

It said 60 percent of the imports over the past 12 months were from Pakistan and the balance from China.

The competitiv­e threat from Chinese cement producers led to a number of local cement producers lodging a dumping complaint with the Internatio­nal Trade Administra­tion Commission (Itac) about cement imported into South Africa from Pakistan. Itac made a final determinat­ion in December last year on the anti-dumping duties and imposed duties ranging between 14.29 percent and 77.15 percent on cement imported from Pakistan. This resulted in a significan­t decline in cement imports into South Africa from Pakistan and the Pakistan government approachin­g the World Trade Organisati­on to revoke the anti-dumping rules imposed by Itac.

PPC in the presentati­on attributed the decline in cement imports to steadily increasing shipping rates while the exchange rate “continued to be a headwind for importers”. Group’s focus PPC said the focus of the group’s management following its successful R4 billion rights offer, which was concluded last week, would be on its empowermen­t transactio­n; the delivery of existing projects in South Africa, the Democratic Republic of Congo, Zimbabwe and Ethiopia; delivery of business plans in the rest of Africa projects; continued management actions in response to risk, compliance and internal controls; and the continuati­on of the group’s profit improvemen­t programme.

Darryl Castle, the chief executive of PPC, said details of the unwind of the group’s empowermen­t transactio­n would be shared with investors “in due course”.

PPC in 2008 implemente­d its first black ownership initiative, which matures in December.

In terms of the transactio­n, 15 percent of the shares in PPC were acquired by broad-based partners.

PPC shares fell 3.25percent to close at R5.95 on Friday.

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