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PPC LIMITED - Trading update for the quarter October 2015 to December 2015

Release Date: 25/01/2016 12:05
Code(s): PPC     PDF:  
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Trading update for the quarter October 2015 to December 2015

PPC Ltd
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000170049
("PPC" or the "Company")

Trading update for the quarter October 2015 to December 2015

PPC’s expansion remains well on track and we are pleased to advise
that construction at our sites in the Democratic Republic of the Congo
(DRC), Zimbabwe and Ethiopia is in line with expectations. With effect
from 18 December 2015, final anti-dumping duties were imposed on
Portland cement originating in or imported from Pakistan. These duties
will remain in place for the next five years. Progress with our new
strategy is underway and the proposal to acquire 3Q Mahuma Concrete
(Pty) Limited is in line with our stated intent of becoming a provider of
materials and solutions into the basic services sector and also
progressing the company’s ready-mix channel management strategy.

Overall cement sales volumes (including channel management) declined
by 3% for the first trading quarter of 2016. Cement sales in the South
African business declined by 1.6% while the international businesses
recorded an 8% decline; including low margin cement exports to other
African countries.

Despite the tough South African operating environment, coastal regions
achieved positive volume growth however this was more than offset by
declines recorded in the increasingly competitive Gauteng and inland
regions. For the same period, average selling prices decreased by 4%.

The conclusion of major infrastructure projects in Zimbabwe has led to
double digit declines in local sales and cement exports have also
reduced significantly on the back of exchange rate effects. After a strong
performance in 2015, cement sales volumes in Botswana have reduced
as the retail market remains highly contested due to weak demand and
intense competitor activity.

During the first quarter of 2016, cement sold by our operation in Rwanda
more than doubled at the expected EBITDA margin. High rainfall in the
local market coupled with constrained export opportunities had a
negative impact on sales. The new 600 000 ton per annum plant is
performing satisfactorily and the kiln has passed its performance test
regarding output and heat consumption.

Performance in the lime division was negatively affected by the
performance of the local steel and alloys industry. New projects secured
by the Aggregates and Pronto divisions led to improved performance.


Normalised earnings for the first half of 2016 are anticipated to reflect a
year-on-year decline on the back of a tough operating environment and
increased interest charges due to the ramping-up of the Rwanda
operations.

While the South African and rest of Africa trading environment continue
to face headwinds, we believe that our various response strategies have
positioned PPC well to limit the impact on the group.

PPC will continue with its focus on the Profit Improvement Programme
which continues to deliver solutions for sustainable long term value
creation.

Any forecast financial information on which this trading update is based
has not been reviewed by the company´s auditors.

BL Sibiya
Chairman of the board
25 January 2016


Sponsor:
Merrill Lynch South Africa (Pty) Limited


 

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