PPC - Strong Cement Growth Drives Further Expansion

PPC - Strong Cement Growth Drives Further Expansion                             
Pretoria Portland Cement Company Limited                                        
(Incorporated in the Republic of South Africa)                                  
(Company registration number 1892/000667/06)                                    
JSE code: PPC & ISIN: ZAE000005559                                              
STRONG CEMENT GROWTH DRIVES FURTHER EXPANSION                                   
Sustained double digit growth in cement demand has resulted in the domestic     
industry reaching full capacity according to Pretoria Portland Cement Ltd       
(PPC) who released their full year results to September, today.                 
Commenting on the results John Gomersall, chief executive officer of PPC        
said, "Regional cement sales grew 17% year-on-year and boosted market share     
as PPC supplied an increased customer base. Both the residential and non-       
residential construction sectors continued to exhibit strong growth.            
Consequently, the buoyant market conditions have driven cement demand to        
record levels. The South African together with neighboroughing states           
cement consumption is now at the same level as the United Kingdom," he          
added                                                                           
At the interim stage Gomersall warned that as the company reached full          
capacity, earnings growth would slow until the increased output from            
expansion projects becomes available. Today Gomersall reiterated that the       
earnings growth achieved over the past few years is unlikely to resume          
until additional capacity from the Batsweledi project becomes available.        
 "Owing to the increased demand, all production units, including the            
Jupiter kiln which was re-commissioned in March, were fully operational,        
providing the much needed additional capacity in the second half," said         
Gomersall.                                                                      
PPC cautioned, however that operating older kiln lines resulted in higher       
operated costs. In addition logistics costs had also increased due to the       
increased complexity in the movements of product to keep customers              
supplied. These additional costs put some pressure on cement margins.           
Capital expenditure amounted to R395.0 million (2005: R180.6 million) and       
related mainly to the Batsweledi expansion and Jupiter projects.                
"The Batsweledi project which will add 1.2 million tons of cement capacity      
is progressing according to plan," said Gomersall.  The planning phase to       
expand and modernise the capacity in the Western Cape at Riebeeck West is       
progressing well and I anticipate that this proposal will be presented to       
the Board by August 2007.  The R600 million state-of-the-art cement milling     
facility at our Hercules plant in Pretoria to serve the Inland region, has      
reached the final planning phase and this proposal is likely to be              
presented to the Board in the first calendar quarter of 2007,. The              
Environmental Impact Assessment processes for both these projects are in        
full swing," he stated.                                                         
The strong market conditions resulted in group revenue increasing by 18% to     
R4.7 billion whilst operating profit rose 23% to R1.9 billion and headline      
earnings per share increased by 31% to 2260 cents per share.                    
In a further display of commitment to its empowerment initiatives, PPC          
announced the formation of a Broad Based Black Economic Empowerment (BBBEE)     
and Transformation Committee. The initial focus of the committee will be on     
the company"s implementation of its BBBEE ownership plans.                      
Commenting on PPC"s prospects Gomersall said that infrastructural               
development and increased construction activity ahead of 2010 bodes well        
for cement demand.  Nonetheless, the middle and upper residential               
construction sectors could experience a slow down following the recent          
interest rate hikes.                                                            
PPC however cautioned that expenditure on Batsweledi and the two other          
expansion projects if approved, would necessitate increased levels of           
capital investment and borrowing and would likely impact on the declaration     
of further special dividends.                                                   
In view of the good results and surplus cash position, the company has          
declared a final dividend of 1100 cents per share (2005: 840 cents per          
share) and a special dividend of 770 cents per share (2005:800 cents per        
share).                                                                         
For further information contact:                                                
John Gomersall                                                                  
Barloworld: 011-445-1015                                                        
Orrie Fenn                                                                      
PPC: 011-386-9069                                                               
Sandton                                                                         
8 November 2006                                                                 
Sponsor: JPMorgan Equities Limited                                              
Date: 08/11/2006 10:42:35 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department