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PPC Interim Results - Media Release Pretoria Portland Cement Company Limited Incorporated in the Republic of South Africa (Registration number 1892/000667/06) ("PPC" or "the company") JSE code:PPC ISIN code: ZAE000005559 Media Release FINAL: 5 May 2005 PPC reports 25% growth in Operating Profit Continued growth in domestic cement volumes and improved operational efficiencies helped Pretoria Portland Cement Company Ltd (PPC) post a 25% growth in operating profit to R646.9-million in the six months to March 2005 (Mar 2004: R517.2-million). The growth in the domestic cement demand has been driven by the upswing in residential construction on the back of lower interest rates. These volumes together with price increases, excellent cost reductions and improved operational efficiencies in all the divisions were the driving factors of PPC"s operating profit growth. South African cement volumes increased by 10% and all provinces have shown steady growth, other than the Eastern Cape which reflected the anticipated tapering off of volumes supplied to the Ngqura Harbour project. Group revenue improved by 11% to R1,8-billion (Mar 2004: R1,63-billion) primarily as a result of the increased cement volumes. Export volumes were lower, curtailed by the strength of the Rand as well as capacity constraints at Spoornet. "The strong growth in the local market, which was higher than we anticipated, has more than compensated for the decline experienced in the export markets," said John Gomersall, chief executive officer of PPC. While PPC has announced its planning and scoping of a one million ton expansion programme for the inland market, the Board has approved capital expenditure of R50-million to recommission the 550 000 ton-a-year Jupiter plant in Germiston. "For this limited amount of capital expenditure, we will provide the market with additional security of supply over the two and a half year construction and commissioning period of our new expansion project," said Gomersall. "The 1 million ton project should be presented to the PPC board for approval during the last quarter of 2005," continued Gomersall. Capital expenditure amounted to R47-million (Mar 2004: R34.3-million). According to Gomersall expenditure included the purchasing of quarrying equipment, information system upgrades; and the scoping and costing of the inland capacity expansion project. The effective normal tax rate reduced in line with the decrease in the company tax rate to 29% as announced at the beginning of this year by the Minister of Finance. The STC includes R94.1-million arising from the R14 per share special dividend paid in January 2005. Headline earnings per share increased by 4% to 610 cents per share, after the STC charge of 175 cents per share on the increased 2004 special dividend (2004: 81 cents per share). The company have declared an increased interim dividend of 260 cents per share (2004: 220 cents). Revenue in the Cement division increased by 14% to R1,5-billion (Mar 2004: R1,3- billion), with operating profit realising a 25% increase to R574.7-million (Mar 2004: R461.1-million). Increased cement demand has created the necessity for some of the older kiln production units at PPC Cement to be recommissioned. "These kilns are less efficient, and whilst they cannot be run cost effectively over a sustainable period, they are fully depreciated and therefore reflect further improvement in the cement operating margin," continued Gomersall. Revenue in the Lime operation improved by 6% reflecting increased demand from customers in the local steel sector. Operating profit showed a 28% improvement to R54.1-million (Mar 2004: R42.2-million). The Packaging division experienced strong demand for cement sacks and reported a 30% improvement in operating profit at R18.1-million. "We are very pleased with this great performance in the first interim reporting period of our BEE joint venture in Afripack with the women executives and shareholders of Nozala Investments," continued Gomersall. Commenting on PPC"s prospects going forward Gomersall said: "There is renewed optimism in the construction industry, which is driven mainly by Government"s commitment to increase infrastructural investment. This combined with buoyant economic forecasts and business confidence will impact positively on cement demand. We would caution though that demand may be tempered by shortages of other building materials and skills in the industry, nevertheless we believe that cement demand could grow by between 8% and 10% for our financial year." "We are also confident that strong demand from the local steel producers will be beneficial to the performance of the lime division," concluded Gomersall. PPC expects to report increased operating results and cash flows for the full year, based on the strength of its performance during the first half and positive forecasts in cement volumes for the remainder of 2005. Ends Issued by Meropa Andy Visser Tel: +27 11 772 1000 Manager: Corporate Tel: (011) 772-1000 , Cell: 082 571 2313 On behalf "Pretoria Portland Cement" of John Gomersall Ceo, (011) 445-1015 4 May 2005 Sponsor: JP Morgan Equities Limited Date: 06/05/2005 10:31:43 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
