PPC: What Castle needs to build

2015-02-01 16:00

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New PPC boss Darryll Castle must now win the hearts of employees who are still set on having former chief executive Ketso Gordhan back.

He’ll also need to manage a merger proposal from smaller rival AfriSam and arrest the cement producers’ deteriorating financial profile.

Slightly more than three weeks into the job, Castle has unruffled some feathers by retaining Tryphosa Ramano as his finance chief.

Gordhan’s attempts to remove Ramano from the company towards the end of last year precipitated a fallout with the board that saw PPC shed more than a quarter of its value.

Those wranglings culminated in the election of a reconstituted board during the company’s annual general meeting on Monday at the behest of three shareholders who had previously called for a special meeting to remove the board, but later reached a compromise.

This delivered six new members to serve alongside six existing members of the board, including former finance director Peter Nelson – who scored the highest number of shareholder votes after Castle and former Reserve Bank governor Tito Mboweni.

On Tuesday, PPC said the board had confirmed Ramano’s appointment as chief financial officer and a member of the board.

The cement producers’ employees, who collectively own 4.42% of the company’s shares via the PPC Masakhane Employee Share Trust, were allowed to vote for board members through proxy forms sent to trustees.

One employee at PPC’s Port Elizabeth plant said she was satisfied with the hybrid board.

“It would have been nice having Ketso on that board, but?...?new year, new beginnings and looking ahead to a bright year,” the employee, who asked not to be named, told City Press.

“[We have] met [Castle], but the feeling among the workers is more scepticism. He seems like a knowledgeable person, but at this stage it is still early days and too soon to tell.”

Another employee, at the Jupiter Cement Plant in Germiston, Joburg, said the majority of employees at the plant did not vote this time around.

He was among those who submitted proxy forms in November opting to remove the board before the compromise deal was reached.

“As far as I know, people didn’t take part in the nomination of the current board members as they felt that it doesn’t, and it won’t, make any difference,”he said.

Castle is away on an internal company roadshow at the moment and was not available for interviews.

Sibonginkosi Nyanga, an analyst at investment manager Imara, said the new board had the potential to stabilise PPC, backed by the experience of Mboweni, Nelson and former AfriSam chief executive Charles Naude.

“It’s yet to be seen whether Mr Castle will be a darling of the market like the former CEO,” Nyanga said.

“Mr Castle should calm concerns in the investment community that PPC’s African expansion plans could be affected, partly because the former CEO held many of the key relationships on critical projects on the continent. PPC has little room for error while implementing its strategy to grow into more promising African markets, given a stretched balance sheet and difficult conditions in South Africa.”

Nyanga said Castle had to come up with strategies to fend off competition from rivals Sephaku and Mamba Cement in the increasingly competitive local cement market.

The more immediate task for Castle and his executive team is to deal with a merger proposal from smaller rival AfriSam.

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