PPC eyes opportunities in Africa

HARARE - Cement maker Pretoria Portland Cement (PPC) says it is pursuing additional buy out opportunities in Africa to help unlock shareholder value and increase its presence in the continent.

Last year, the South Africa-based company hinted that it could spend about $300 million on funding more acquisitions in the continent this year.

In its update for the first quarter ended December 31, the company said receipt of its Zimbabwean indigenisation certificate in November last year was an important step into Africa.

PPC also said last year’s 51 percent acquisition of cement maker Cimerwa in Rwanda for $69,4 million was a “significant step” in its strategy to expand into the rest of the continent.

Group chairperson Bheki Sibiya said the quarter was characterised by growth in PPC’s South Africa, Botswana and Zimbabwe cement volumes.

This came after cement markets had slumped dramatically in recent years, following the onset of the global recession and the end of the Soccer World Cup in 2010.

PPC said the renewed growth trend in South Africa was experienced across all provinces except the Eastern Cape, where heavy rains and imports affected demand.

“The effect of this positive demand has been partly offset by some product sourcing challenges over the period,” Sibiya said.

He said these problems were mainly because of lower than planned production at the group’s Dwaalboom factory in Limpopo, but that normal production had since been restored.

However, he said the selling environment for cement-related products remained “challenging”, despite “some” price increases having been achieved in South Africa and Zimbabwe.

Volumes in the group’s lime division declined on reduced off-take from the domestic steel industry, while aggregates volumes remained under pressure because of weak demand.

PPC said there was still limited implementation of major infrastructure projects in South Africa, Botswana and Zimbabwe.

“However, our outlook for cement demand in these three territories gives us reason to remain cautiously optimistic,” Sibiya said.

Excluding international financial reporting standards charges from the Zimbabwe indigenisation programme and from the implementation of the company’s second black economic empowerment transaction in South Africa, earnings for the first half of this financial year were expected to improve on last year. - Business Writer

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