PPC plots robust African growth
PPC plans to more than double its revenue, profits and volumes every 10 years by aggressively growing its presence in Africa and diversifying into other building materials.
Darryll Castle, the chief executive of the listed cement and lime producer, said yesterday this was achievable because they had looked at Africa over the next 35 years to 2050 and the outlook for the continent was positive.
“We see the population doubling and becoming wealthier, a lot of infrastructure spend taking place and new cities being built that aren’t there today.
“If we can maintain our market share and exposure in Africa, we have to double the size of the business in well under 10 years. We see Africa as a very positive environment and PPC becoming a major player in a big growth area,” he said.
Castle said they ultimately saw PPC as a global player but were focusing on Africa first although they would be open to global opportunities when they arose. He confirmed PPC’s business strategy had been revised to ensure the company remained positioned for growth.
The new vision was for PPC to become a world-class supplier of materials and solutions into the basic services sector and establish a vertically integrated materials business.
This business unit would house PPC’s ready-mix, aggregates and related building materials businesses to offer clients end-to-end solutions.
A bolt-on acquisition was earmarked for early next year.
Castle stressed 70 percent to 80 percent of PPC’s focus would remain on its core product of cement but over time it would get earnings and revenue that was not currently core to its business. PPC’s new 600 000ton-a-year Cimerwa plant in Rwanda was officially opened in August and was operating at 60 percent of capacity in September.
Construction
Castle said construction of the $280 million (R3.9bn) 1 millionton-a-year plant in the Democratic Republic of Congo and $85m 700 000-ton-a-year mill in Harare were progressing well, with both on track for commissioning at the end of next year.
He said the 1.4 million-ton-ayear plant in Ethiopia would cost between $170m and $180m, with commissioning scheduled for the second quarter of 2017.
PPC yesterday reported a 19 percent decline in headline earnings a share to R1.45 in the year to September from R1.79 in the previous year. Total cement sales volumes ended 2 percent lower and group revenue increased by 2 percent to R9.2bn from R9bn.
Operating profit dropped by 5 percent to R1.6bn from R1.7bn. A profit improvement programme, which has a target of generating R400m by 2017, added R212m to PPC’s bottom line in the year. A final dividend of 33c was declared.
Shares in PPC increased 5.05 percent yesterday to close the session R16.02 yesterday, which valued the company at R9.7bn.