PPC takes steps to ensure cement supply in W Cape

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Cape Town - Cement manufacturer PPC has implemented measures in the Western Cape to mitigate the impact of the ongoing drought, it said in an operational update for the nine months ended December 31 2017, issued on Friday.  

It has employed alternatives from an operational perspective to ensure continuity of supply in the province, according to interim CEO Johan Claassen.

"From the demand side we are working with local government, as construction is viewed as a priority economic sector. However, we continue to monitor the demand situation closely," he explained.

At the same time, PPC continues to make good progress in terms of its strategic priorities, according to the note to shareholders.

Group revenue has shown an improvement over the previous comparative period ended 31 December 2016. Group earnings before interest, taxes, depreciation, and amortisation (EBITDA) has also tracked ahead of the previous year.

Claassen said that while good operational cost management has prevailed in the period, corporate action and other costs have negatively impacted on group EBITDA.

"The lack of large infrastructure projects continues to hamper cement volume growth in SA. In the rest of Africa the robust growth in Rwanda has been maintained.

"Our Zimbabwe business has increased volumes significantly compared with the same time last year. In the DRC, we have managed to ramp-up market share, although the market remains a significant challenge," he explained.

Claassen said the company is particularly pleased to have successfully negotiated a two-year moratorium on capital repayments in the Democratic Republic of Congo (DRC), which has further improved its liquidity.

"We have maintained our market-leading position in South Africa despite the competitive trading environment. The rest of the Africa portfolio continues to grow, delivering solid results ahead of the same period last year,” said Claassen.

Southern Africa cement

PPC estimates that growth in overall cement demand declined by 3% to 4% in South Africa for the 2017 calendar year. An effective overall selling price increase of 2% was realised when compared to the prior period.

PPC implemented a further price increase of 2% to 5% in January 2018. A volume decline of between 1% to 2% was realised on a year-to-date basis. This is an improvement from the 1% to 4% volume decline reported at the half year.

The materials business continues to experience challenging trading conditions. Lime saw continued pressure on volumes and selling prices, due to its exposure to the steel industry.

Aggregates and Readymix were negatively impacted by a competitive construction environment exacerbated by a lack of construction projects in Gauteng and surrounding areas.

"Any forecast or financial information on which this trading update is based has not been reviewed by the company's auditors," said Claassen.

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