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Jul 14, 2011

PPC expects positive sales growth in H2, but conditions still tough

PPC executive for corporate strategy and communications Kevin Odendaal (pictured) and executive for cement sales and marketing Richard Tomes discuss strengthening the company's position in the current challenging market conditions. Camera Work and Editing: Darlene Creamer.
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South Africa’s cement industry was beginning to show some signs of a possible recovery, with recent industry sales figures showing that the rate of contraction was slowing, JSE-listed Pretoria Portland Cement (PPC) said on Thursday, adding that it was still forecasting a growth in sales for the second half of 2011.

But executive for corporate strategy and communications Kevin Odendaal said the difficult business environment in South Africa’s construction and building sectors continued to place strain on the cement industry and on the sales outlook.

Sales volumes fell by 4% year-on-year from October 2010 to March 2011, which was the smallest rate of decline for a six-month reporting period since September 2008. More recent trends were also positive, with the Cement and Concrete Institute reporting that monthly cementitious product sales for June increased by 10.2% over sales recorded in June last year.

“It is too early to say if this is the bottom of the cycle, but there are definitely signs of recovery and this is in line with our view that the cement industry will experience positive growth in the second half of the year,” he explained.

The dynamics of the market, particularly with higher production capacity versus demand, have resulted in increased levels of competitiveness in the market.

PPC has responded by beefing up its operations and products and said that it was also beginning to reap the benefits from energy-efficiency investments at its Hercules operation, in Pretoria. The investment has so far helped to shave almost 5% off its electricity costs.

Overall the group has invested some R700-million at the plant, where it had also expanded its cement milling capacity. The new clinker grinding facility would also increase output.

The company has also installed an energy efficient vertical roller mill, a clinker silo and a duo-cell cement silo with bulk road loading facilities. The vertical roller mill, together with the remaining milling capacity is estimated to produce an electrical energy saving for each ton of cement produced of around 15%.

The company has also made significant changes to its existing product range, which PPC executive for cement sales and marketing Richard Tomes said reduced concrete costs while allowing builders and contractors to produce 15% more concrete.

PPC’s OPC (Original Portland Cement) product would change to a 52.5 N (Newton) classification (previously 42.5 N) and PPC’s Surebuild has been upgraded from 32.5 R cement to a 42.5 N cement.

Edited by: Terence Creamer
Creamer Media Editor
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