The company will create a new unit for its expanding non-cement building materials and services operations.
PPC, South Africa’s largest cement maker, said growing demand for the building material on the world’s least-developed continent would help it meet a target to double the size of the business every decade.
PPC expects “massive growth” in African cement demand over the next 35 years, driven by a growing population, rising wealth and greater ease of doing business, chief executive officer Darryl Castle said in an interview on Wednesday. The company will create a new unit for its expanding non-cement building materials and services operations, which will help further the company’s African growth plan, he said.
If PPC holds on to its market share in Africa, the company “can more than double every ten years at least,” Castle said. The doubling refers to a combination of metrics, including revenue, assets and profitability, he said.
PPC, which is grappling with tough competition and falling prices in its home market, is seeking to reduce costs while expanding elsewhere in the continent. The company has achieved more than 50% of a R400 million ($28 million) profit-improvement target announced in May this year, and a goal of generating 40% of revenue from the rest of Africa by 2017 is “within reach,” the company said.
PPC shares gained as much as 6.7%, the most since July 9, and traded 5.05% higher at R16.02 at the close in Johannesburg, paring the year’s decline to 41%. That values the company at R9.8 billion.
The company started a new cement plant in Rwanda in August and projects in the Democratic Republic of Congo, Zimbabwe and Ethiopia are all more than 50% complete, PPC said. The company’s South African business has been pressured by increasing competition, a sluggish economy and low-priced imports, Castle said.
Full-year earnings per share excluding one-time items were R1.45 in the year through September, compared with R1.79 a year earlier, the company said on Wednesday. Sales gained 2% to R9.2 billion.
