| Tue 11 Nov 2008, 7:30 | | PPC - Pretoria Portland Cement Company Limited - PPC Media Release for SENS and |
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PPC
PPC
PPC - Pretoria Portland Cement Company Limited - PPC Media Release for SENS and
Direct Distribution to Media
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE code: PPC
ISIN: ZAE000096475
PPC Media Release for SENS and Direct Distribution to Media
11 November 2008
Good results for PPC in a challenging year
Highlights:
- Revenues up 12% to R6,2 billion (2007: R5.6bn)
- Strong cash generated from operations up 16% to R2,5 billion (2007:
R2.2bn)
- Batsweledi expansion project successfully commissioned within budget
- Broad-based black economic empowerment transaction completed
- Headline earnings per share up 8% to 283 cents (2007: 263cps)
- Increased total dividend declared 225 cps (+ 10 %) (2007: 205cps
excl. special of 61cps)
PPC Financial results
Group revenue increased 12% to R6,2 billion whilst operating profit rose 7% to
R2,3 billion. All production units ran at full capacity to meet demand. The
very high increase in diesel prices caused a substantial increase in cement
distribution costs. Coal, electricity and maintenance costs also increased
significantly above inflation and future selling price increases will need to
achieve cost recovery of all these abnormal inflationary pressures.
Headline earnings per share increased by 8% to 283 cents per share, calculated
using the weighted number of shares in issue of 529 049 918 shares and also
adjusted for treasury shares held in terms of the share buy-back.
John Gomersall, CEO said "These are good results in a challenging year. Team PPC
worked tirelessly to achieve several milestones in the past year including; the
commissioning of the new kiln at Dwaalboom, our 15% BBBEE transaction, record
cement production and an improved safety record. Unfortunately input costs such
as fuel, coal and electricity escalated alarmingly in the second half of the
year."
Dwaalboom
The Batsweledi capacity expansion at Dwaalboom was commissioned in the last week
of September, within budget and achieved warranted output during a 5 day test in
the first month of production. This is a remarkable achievement for such a large
and complex project. The ramp up to consistent full output will however take
some months.
Broad-Based Black Economic Empowerment Transaction
The company announced details of its empowerment transaction in August 2008.
This requires shareholder approval at a general and scheme meeting to be held
later this morning. The initiative, in aggregate, will represent 15.29% of PPC`s
increased share capital.
Share Buy-Back Programme
In terms of shareholder authority granted at the previous annual general
meeting, a wholly-owned subsidiary of PPC acquired 14.9 million PPC shares
between 15 February 2008 and 31 March 2008 at an average price of R39.51 per
share, inclusive of transaction costs. A further 5.2 million shares were
acquired between 5 September 2008 and 30 September 2008 at an average price of
R31.29 per share. Repurchased shares to date amount to R753 million and were
funded from surplus cash. This repurchase assists in reducing the dilution
effect of new shares to be issued in terms of the BBBEE transaction.
Cement Operations
Industry regional cement volumes declined slightly for the first time after
seven consecutive years of strong growth. This was due mainly to the continued
drop in demand from the formal residential sector but in spite of the delays in
commencement of many of the above mentioned infrastructure projects, demand from
that sector virtually offset the residential market decline.
The cement operating margins came under pressure from spiralling energy and
administered input price increases, particularly in the last quarter.
Increases significantly above PPI inflation continued on diesel, coal and
electricity as international energy prices ballooned
Gomersall added, "Cement is an energy intensive business. Whilst the current
international economic crisis has already impacted on international pricing
specifically for fuel and coal, the reduction in local input cost is expected to
take some time to flow through. We are seriously considering introducing an
energy surcharge on cement to recover these dramatic increases until such time
as there is a return to some sort of normality."
Safety
The company`s Behaviourial-Based Safety initiative has shown further improvement
this year with the Lost Time Injury Frequency Rate declining to 1.5 lost time
injuries per every million man-hours worked. Additionally. in our Lime
operations a new milestone of 3 million injury free hours was achieved in
September 2008, a new PPC record. These are proud achievements for PPC.
New Chairman Appointed
We are pleased to announce this morning that Mr Bheki Sibiya was appointed to
the board on 10 November 2008 and as an independent non-executive Chairman with
effect from 17 November 2008.
Outlook
We have examined different scenarios for cement demand in the year ahead,
ranging from modest to negative growth and we have action plans in place that we
will implement as appropriate.
Gomersall commented further; "We expect cement demand for rural and affordable
housing to continue as government plans to eliminate the backlog of almost 3
million houses by 2014. Additionally, we will optimise our production units,
benefiting from the additional output and lower production cost of the new
Dwaalboom kiln 2 and we should therefore be able to supply all regional demand
without the need for imports. We will also resume supplying our traditional
export markets".
The South African government has announced plans for capital investment in
excess of R600 billion over the next three years. This will give rise to
accelerated investment by public enterprises, and should ensure that the strong
demand from infrastructure projects will continue.
Gomersall added, "Together with appropriate increased cost recovery, this should
enable the company to report a steady performance and continue to report a
strong operating cash flow for the year ahead".
Ends -
For further details on the 2008 year under review please refer to the full
results released
earlier on SENS or for further enquiries contact:
Pretoria Portland Cement Company Limited
Contact: John Gomersall Orrie Fenn
+27 11 386 9015 +27 11 386 9069
College Hill
Contact: Jacques de Bie Nandile Ngubentombi
+27 11 447 3030
+27 82 691 5384
Date: 11/11/2008 07:30:03 Produced by the JSE SENS Department.
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