Nov 08, 2011
PPC aims to generate half of its revenue from rest of Africa by 2016Back
Engineering|Port|Africa|Aggregates|Botswana|Cogeneration|Diesel|PROJECT|rail|Readymix|Renewable Energy|Renewable-Energy|Road|transport|Africa|Democratic Republic Of Congo|Cogeneration|Energy|Equipment|Logistics|Cogeneration|Power|Operations|Diesel
© Reuse this
The company increased its revenue contribution from the rest of the continent to 20% in the past financial year, which Stuiver said was in line with PPC’s strategic growth objectives, with Africa being “the growth story of the moment”.
“We would like our earnings from Africa to increase to between 40% and 50% in the next five years. We understand Africa better than most other players; it is on our doorstep and we believe it is an opportunity begging, especially for a cement player finding it difficult to grow in its home territory,” he told Engineering News Online.
The group looked at eight significant expansion opportunities into other African regions during the financial year ended September 30, four of which were abandoned due to either a lack of potential for value creation, unacceptable levels of risk or a combination of both.
Of the remaining four, one project has resulted in a $44-million conditional offer for a 58% stake in a government-owned cement producer in the Democratic Republic of Congo, Cimenterie Nationale. “We await the outcome of our bid. The remaining opportunities are being pursued and we expect that further opportunities will arise in due course,” Stuiver said.
In Botswana, PPC recently bought Quarries of Botswana for $6.8-million, which it said would benefit its aggregates operations in that country, and in South Africa, the group is buying Gauteng-based readymix and fly ash supplier Pronto Holdings for R280-million.
Stuiver said PPC was optimistic about the Zimbabwean cement market. Domestic sales in that country improved by more than half during the year,owing to a combination of increased demand and operational problems suffered by PPC’s competitors. The operating performance at the Colleen Bawn factory improved during the second half of the year and equipment at its Bulawayo grinding depot, that had been mothballed for 15 years, was recommissioned to meet increased demand.
However, Stuiver pointed out that significant input price inflation on key items such as electricity, continued to be a concern for the Zimbabwean operations.
While growth remained slow in South Africa, Stuiver stated that the group was confident in the long-term recovery of the domestic cement industry. “We have seen the worst. The cyclic trend is coming up again, after hitting the bottom in 2010.”
Stuiver cautioned, however, that the eurozone crisis could result in another general slowdown in business.
PPC said that overcapacity in the South African cement industry continued to drive competitive market conditions and was putting prices under pressure. “A weighted average increase of 4% in selling prices during the year was insufficient to recover rising input costs,” he said.
Costs rose 11% in the financial year on the back of above-inflation electricity prices and diesel price increases, accompanied by higher logistics costs as inadequate rail transport had to be supplemented by more expensive road transport.
PPC’s cement volumes in South Africa fell by 4% in the financial year ended September, while overall cement sales were 3% lower.
The group’s revenue was almost flat at R6.83-billion, compared with R6.81-billion in the previous financial year. Earnings a share declined by 22% to R16.40 a share.
PPC reduced headcount by 6%, or 180 people, over the past financial year, with 35 employees from head office and 45 employees from its Port Elizabeth plant taking voluntary retirement packages. Stuiver said this was necessary to align the Port Elizabeth factory to production capacity.
PPC also slowed its capital investment programme in line with depressed trading conditions. Capital investment of R483-million was incurred, compared with R613-million in the previous financial year.
Meanwhile, Stuiver said that PPC has completed a feasibility study into a cogeneration facility at one of its plants, but concluded that it would not be worth its while.
“The capital cost of setting electricity cogeneration units at our plants, versus the energy costs we would save does not make it worthwhile. We would rather take the capital and put it towards a cement plant,” he said.
However, the company was investigating a wind power joint venture. “We have an exciting prospect and would like to tender in the next round of government’s renewable-energy procurement scheme in March 2012,” he said.
PPC is aiming to generate about 30 MW, or 10% of its total energy needs.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Researcher and Deputy Editor Online
Other Construction Materials News
Updated 16 minutes ago South Africans could be living without load shedding this winter, if acting Eskom CEO Brian Molefe gets his way. Speaking at the launch of the Transnet Development Hub on Friday, Molefe said planned maintenance was mostly completed and so the utility was able to...
Updated 59 minutes ago The United Nations (UN) plans to raise $1.6 billion from donors to improve agriculture, food security, health and governance in Zimbabwe between 2016-2020, its representative in the southern African country said on Friday. The UN has over the last decade taken a...
Updated 1 hour 54 minutes ago The latest product of global major airliner manufacturer Airbus, the A350-900, is now in production ramp up phase, following its entry into service last year with launch customer Qatar Airways. And the company is now preparing for the introduction of the next version...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While strongly welcoming the promulgation of the new Part 101 of South Africa’s civil aviation regulations, governing the commercial operation of civil remotely piloted aircraft (RPAs) in South Africa, the Commercial Unmanned Aircraft Association of Southern Africa...
LSM Distributors has contracted engineering consultancy WSP | Parsons Brinckerhoff Africa to undertake the R100-million restoration of the 54-year-old Kyalami racetrack, situated in Midrand. The restoration will assist in re-establishing it as a venue for...
South African Defence Minister Nosiviwe Mapisa-Nqakula has expressed the hope that the defence budget will be significantly increased over the next five years. She did so while addressing the media in her recent budget vote media briefing. The 2015/2016 defence...
The African Development Bank (AfDB) has been an implementing agency for the Global Environment Facility (GEF) since 2008. The relatively young portfolio has 28 projects over 30 countries on the continent according to the 2014 AfDB and GEF annual report released...
Investment in South African youth through apprenticeships and learnerships will not only create direct benefits for businesses but will also contribute significantly to job creation and socioeconomic transformation in the country.