Displaying items by tag: PPC
Algeria: South African cement firm PPC has announced that it will buy a stake in an Algerian cement company as part of its drive to boost sales outside its home market.
PPC said that it will buy a 49% stake in Hodna Cement, which plans to construct a US$350m plant in the country. PPC did not disclose how much the deal will cost, but said that it will be funded on a project finance basis, with 80% of the debt to be sourced from local Algerian banks.
"This project sees us entering yet another African country and gives us confidence that by 2017, 40% of PPC revenues will be earned outside of South Africa," said PPC CEO, Ketso Gordhan. PPC is also constructing cement plants in Ethiopia, Rwanda and the Democratic Republic of Congo.
Both Dangote Cement and PPC have reminded the world about their development plans for sub-Saharan Africa. In the wake of PPC's yearly results on 19 November 2013 came a spotlight on the South Africa-based cement producer's international ambitions. Not to be outdone, Nigeria's Dangote Cement then put out a press release detailing all of its big development projects.
Dangote and PPC are set to go into direct competition when the Dangote subsidiary, Sephakhu Cement, opens its 3Mt/yr integrated cement plant at Aganang, North West province in early 2014. It will be the first time the Nigerian cement giant will be producing cement in the same country as its competitor in sub-Saharan Africa, PPC. The encounter will set the tone for the producers' next clash when they both open cement plants in Ethiopia in 2015.
Both the African cement producers are targeting a swathe of south to east sub-Saharan Africa from South African to Ethiopia. PPC, based in South Africa, has a presence in neighbouring Botswana, Zimbabwe and Mozambique. It has bought stakes in cement producers in Rwanda, Ethiopia and the Democratic Republic of the Congo and has new cement plants on the way in Ethiopia, Rwanda, Zimbabwe and the Democratic Republic of the Congo. In contrast to PPC's more 'organic' growth strategy from an established base, Dangote, with its existing presence in west Africa is about to enter this region. It has new projects planned in Kenya, Tanzania and Zambia, as well as in Ethiopia and South Africa.
To compare the financing behind each company's expansion, Dangote reported that it had committed US$884m for acquisitions in 2012. PPC intends to spend US$276m on capital expenditure in its 2014 financial year. If these figures from financial reports are correct, Dangote is spending three times as much as PPC on expansion. Dangote may have more money for expansion but PPC has long-standing presences in the region or has recently acquired them.
Dangote reported an 18% rise year-on-year in turnover to US$1.8bn in 2012. The same year its sales volumes increased to 10.4Mt from 8.66Mt in 2012. The company's installed cement production capacity was reported as 19.25Mt from three plants in Nigeria. In comparison, PPC reported a 13% rise in revenue to US$820m for its financial year to the end of September 2013. No exact cement productions figures were released but PPC said that cement sales increased by 7% in the period.
How Dangote and PPC spar in South Africa remains to be seen but one area where they may agree will be on imports. In its final results for 2013, PPC again highlighted the continuing threat of imports from Pakistan, mainly via Durban. Imports comprised 7.6% of national demand as of June 2013. In Nigeria in 2012 Dangote led successfully a campaign to cut foreign imports. Irrespective of increasing demand for cement, adding Dangote to the anti-cement import lobby in South Africa might well make space for a new producer.
South Africa: PPC (formerly Pretoria Portland Cement) has announced that full-year profit in 2013 was increased by 10% after improved sales in its home market and neighbouring Zimbabwe. Net income rose to US$92m in the 12 months to September 2013 from US$83m in 2012.
"Cement sales in our home territories, particularly Zimbabwe and South Africa, have shown good growth," said Ketso Gordhan, chief executive officer of PPC.
PPC is expanding in Africa through acquisitions to offset tougher competition in its domestic market. The company will have three new plants operating in the Democratic Republic of Congo, Rwanda and Ethiopia by the end of 2015, boosting capacity by more than a third to as much as 11Mt/yr.
"Due to modest growth, the domestic trading environment remains tough and highly competitive," said a PPC representative. "We are on track to meet our strategic objective of generating 40% of our revenues from the rest of the continent by 2017."
Democratic Republic of Congo: PPC (formerly Pretoria Portland Cement) has signed a Memorandum of Understanding (MOU) with the Democratic Republic of Congo's Barnet Group to build a US$230m greenfield cement plant. The project will involve building a 1Mt/yr plant and an associated quarry 20km from Kimpese in western Democratic Republic of Congo (DRC).
"This investment is another of PPC's commitments to invest in sub-Saharan Africa and we are very confident about DRC. 22% of PPC's revenue comes from outside South Africa, at present, but the target is to increase this to 40% by our 2016 financial year. We look forward to a growing contribution and partnership with the DRC in the years ahead," said CEO of PPC, Ketso Gordhan.
In its press release announcing the project, PPC noted that the existing cement market in DRC was 'severely' undersupplied. At present, the DRC has 16kg/capita annual cement consumption, the lowest in Africa, compared with the South African average of 240kg and the global average of 400kg.
For the project PPC has partnered with Jean Saidi Bamanisa, Chairman of the Barnet Group, who is also the Honorary Secretary of the Federation of Congolese Companies. He was elected Governor of the Oriental Province of the DRC. The project will take advantage of DRC's first special economic zone.
South Africa: PPC (formerly Pretoria Portland Cement) has announced details of an agreement to buy a controlling stake in Safika Cement Holdings for US$35.3m, according to a Johannesburg Stock Exchange release.
"We are very excited to be able to add another complimentary business to PPC. This is an important step in our 'Keeping the Home Fires Burning´ strategy. The proposed transaction is subject to approval by the regulatory authorities as well as the conclusion of the due diligence process," said chief executive officer of PPC Ketso Gordhan.
Safika is a blended cement producer that owns five blending plants and one milling operation. It produces blended 32.5N cement under three brands: IDM Best Build, Castle and the Spar Build-It house brand.
In the global cement news this week, we see that PPC (the former Pretoria Portland Cement), a large-scale domestic player in the South African cement industry, has taken it upon itself to provide association-like services to cement and concrete consumers in the country. PPC says that it felt obliged to supply information on things like quantity analysis, setting advice and product testing in the place of the now-defunct Cement and Concrete Institute (CCI).
The CCI, lambasted by PPC and other cement producers for years, was accused in April 2013 by PPC of not providing the kind of advice and services that cement producers should expect from an association. PPC, Lafarge and AfriSam all pulled funding and the CCI collapsed.
If the CCI had simply ceased to exist, PPC's new stance, putting its own cash into industry-wide assistance, might be seen as laudable. However, the CCI has been re-born as the Concrete Institute (CI), an organisation that is, by its own admission, no longer on the lookout for the interests of the whole industry. The CI is largely backed by Sephaku Cement, itself majority owned by the Nigerian cement juggernaut Dangote Cement, making PPC's stance suddenly look like one of self-preservation. Dangote is making rapid progress in the sub-Saharan cement industry and firms like PPC cannot afford to let it sweep aside the status-quo in South Africa.
The speed and scale of Dangote's rise, covered previously in this column, is huge. Nigeria's largest company now has interests in Senegal, Zambia, Tanzania, Congo, Ethiopia, Cameroon, Ghana, Sierra Leone, Ivory Coast and Liberia as well as Nigeria and South Africa. Not a month goes by without the announcement of another upgrade, plant or project. Dangote has a fantastic position in its domestic market that has enabled these new projects to be funded.
By contrast PPC is battling a stale construction market in South Africa. South African cement sales fell by 3.8% year-on-year in the fourth quarter of 2012. To counteract this, PPC has committed to expand outside of South Africa to the tune of 40% of total production by the start of 2016. It announced in early 2013 that production is on track to come online in Rwanda, Ethiopia and the Democratic Republic of Congo by the fourth quarter of 2015. Zimbabwe is expected to follow suit by the middle of 2016. It already has interests in Botswana and Mozambique.
With two of its largest home-grown cement producers both expanding rapidly outside of their domestic markets, and a relative lack of interest from the big four multinationals, the sub-Saharan cement market is set for big changes in the medium to long term. PPC and Dangote are expanding towards each other and already share many markets. Dangote has expanded more rapidly and is moving towards exports from Nigeria. PPC is catching up by taking shares in strategically-placed plants. Is sub-Sahara headed for a showdown...? Whatever happens, the future of this rapidly-growing market will certainly be interesting.
South Africa: PPC (formerly Pretoria Portland Cement) launched a news and cement services 'online service desk' on 11 June 2013. The digital service follows hot on the heels of a mobile cement calculator app that can help calculate the amount of cement required for a specific job and offers real-time advice on how and when to lay concrete, based on local weather conditions.
PPC's said that it felt 'an obligation' to provide its customers (and those of the South African cement industry in general) with the information after it pulled its financial support from the Cement and Concrete Institute in April 2013. The CCI has since been dissolved. PPC had accused the CCI of being outdated and no longer able to supply the services that it, as a producer, required from an association. PPC's exit was quickly followed by AfriSam and Lafarge.
Aside from its digital services, PPC will also provide financial and technical support to universities to help develop SA's building materials and civil engineering industries. It will also expand its cement and concrete testing services, as the institute closed its testing laboratory years ago.
The CCI has since been re-established as the not-for-profit organisation the Concrete Institute (CI). It is headed by former CCI managing director Bryan Perrie, who stated that the CI is no longer representative of the whole South African industry. It is strongly linked to Sephaku Cement, which itself is majority-owned by Nigeria's dominant producer Dangote Cement.
South Africa:PPC (Pretoria Portland Cement Company) plans to build a 1Mt/yr plant costing US$200m in the Democratic Republic of Congo, according to its chief executive in an interview with Reuters. The South African cement producer aims to make at least 40% of its sales outside of South Africa by 2016.
"By the last quarter of 2015 we should begin cement production almost simultaneously in Ethiopia, Rwanda and the DRC. Zimbabwe will probably be six to nine months later," said chief executive Ketso Gordhan. He added that PPC is also looking at opportunities in Zambia, Tanzania and Malawi.
PPC reported its interim results for the half-year ending on 31 March 2013 on 16 May 2013. Profit fell by 20% year-on-year to US434.8m but total revenue rose by 8% to US$409m. Gordhan added that rising cement sales volumes for the half-year had been tempered by low sales in Botswana.
Zimbabwe/Mozambique: South African cement manufacturer PPC's (Pretoria Portland Cement) Zimbabwean subsidiary, Portland Holdings Limited (PHL), is to build a new cement plant in the country to service its markets in Zimbabwe and Mozambique. The new plant will produce about 1Mt/yr of cement and will work alongside a separate grinding facility being constructed in Tete in Mozambique.
"In recent years our investment in Zimbabwe has show strong growth on the back of a more buoyant and stable economy," said PPC's chief executive officer, Ketso Gordhan. "This, together with the fact that PPC has received an indigenisation certificate, makes us optimistic about the future of the economy and the country as a whole."
"The construction of additional cement capacity will ensure that PPC continues to be a key player in the development of infrastructure in Zimbabwe and neighbouring countries," added Gordhan. "It is totally in line with our stated strategy of growing our non-South African revenue from the current 21% to at least 40% by 2016.
"Not only will this investment address the expected future increase in cement demand in Zimbabwe but create employment opportunities, beneficiation of the country's mineral reserves and a significant growth opportunity for our indigenisation partners," said PHL's managing director, Zak Limbada.
Ethiopia: The Development Bank of Ethiopia has withdrawn from a US$82.8m loan agreement made with Habesha Cement. In September 2011 the bank approved the loan which was expected to cover over 70% of the financing of the proposed cement factory.
The bank withdrew from the arrangement on the basis of its inability to disburse money at this time. In addition, it also pulled out of the loan commitments to five other companies citing similar reasons. According to sources, the bank has pledged to help the companies in their search for foreign financing.
In July 2012 PPC (Pretoria Portland Cement) and South Africa's Industrial Development Corporation (SAIDC) paid US$21m for nearly half of Habesha Cement. PPC acquired 27% of the Ethiopian cement factory by paying US$12m in cash and the state owned SAIDC paid US$9m for an additional 20%.