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MORE SOLID PROGRESS FROM PPC

Release Date: 30/04/2002 17:12
Code(s): PPC
Wrap Text
Pretoria Portland Cement Company Limited
("PPC")
(Incorporated in the Republic of South Africa)
(Company Registration number 1892/000667/06)
JSE Code: PPC
ISIN: ZAE 000005559
Media Release
MORE SOLID PROGRESS FROM PPC

PRETORIA Portland Cement (PPC) overcame stagnant domestic demand for cement and upheaval in Zimbabwe to post a 33% increase in operating profit to R247.5-million in the six months to March,, thanks in part to the value based management (VBM) initiative and the Kambuku people process.
The STC charge on the special dividend of 500 cents per share depressed headline earnings per share which rose a more modest 6% to 278,4 cents per share.
Chief executive John Gomersall said: "This is a pleasing result considering that 3,7-million additional shares were in issue after the acquisition of Portland Holdings in Zimbabwe which, as expected, did not contribute to earnings at this stage."
An interim dividend of 135 cents per share (2001: 120 cents) has been declared. This is an improvement of 13% on last year's interim dividend. The directors expect to achieve increased operating profits and cash flows for the full year but warn that the rate of increase will be lower in the second half.
Cement exports from South Africa rose 52% to compensate for static local demand. The weaker Rand favourably affected export margins. The
consolidation of Porthold for the first time, also boosted Cement and Group revenues which increased by 23% to R 1.176 billion.
Operating profits surged 33% to R247,5-million and operating margins increased to 22.2% (2001: 20.1%).
Profit after tax rose 24% to R173-million. The tax bill of R68,3-million, gave a group rate of 28,3% for the half year, compared to 26% the previous year. But secondary tax on companies more than quadrupled to R51,4-million (2001: R12,6-million) after last year's special dividend of R5.00 per share which, together with the final ordinary dividend of R3.40 per share, totalled R451-million.
Net operating assets increased by R423.7-million mainly as a result of the consolidation of Porthold.
Notwithstanding PPC's generosity with dividends last year, the balance sheet remains rock solid with interest-bearing debt of R299,3-million, offset to a large extent by cash holdings of R135,3-million. The interest bearing debt:equity ratio at end March remained flat at 16%.
Following a decision to divest itself of associate companies, PPC has sold its 32,8% interest in Natal Portland Cement to Cimpor-Cimentos de Portugal SPGS for R328,9-million and its 25% in Ash Resources to Lafarge for R7,5- million. The divestments are effective only in the present half year. They will increase cash holdings but not effect earnings.
Investment income rose 13%, reflecting strong operational cash flows and interest earned on cash holdings. The proceeds from the sale of PPC
Logistics to Barloworld amounting to R168,7-million were received during the period.
A strong SA cement export performance off-set weak local demand and the cement division lifted operating profit by 36% to R218,4-million.
Porthold made a small operating profit for the half year. Hyper- inflation, negative GDP growth, a lack of foreign currency and the severe drought, together with disruption around the elections, deepened the economic crisis in Zimbabwe. The imposition of price controls also put cement producers under pressure effectively restricting Porthold to the Bulawayo regional markets.
Higher burnt dolomite sales, improved long term contractual prices and higher levels of activity at the PPC Saldanha material handling facility boosted Lime operating profits by 38% to R35.9 million.
The directors report that modest growth in cement demand can be expected for the rest of the year, provided that interest rates do not increase further. Higher operating costs are expected in the second half but improving export demand should help compensate. Porthold is not expected to contribute, if the economic crisis in Zimbabwe continues.
Lime and burnt dolomite sales are expected to decline slightly in the second half because of the planned shutdown of the Corex plant at Saldanha Steel. The packaging division should continue its improvement.
PPC expects a lower growth rate in the second half but will benefit from any improvement in market conditions and opportunities that may arise. Ends
Issued by: Andrea Archer, Meropa Communications (Pty) Ltd Tel 011-772-1000 On behalf of: Pretoria Portland Cement Limited Contact: John Gomersall, chief executive Tel 011-488-1700

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