| Thu 4 Nov 2004, 9:43 | | Cash-flush PPC declares R1-billion in dividends |
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PRETORIA PORTLAND CEMENT COMPANY LIMITED - CASH-FLUSH PPC DECLARES R1-BILLION IN
DIVIDENDS
PRETORIA PORTLAND CEMENT COMPANY LIMITED
Incorporated in the Republic of South Africa
(Registration number 1892/000667/06)
JSE code:
PPC
ISIN code:
ZAE000005559
(`PPC` or `the company`)
Cash-flush PPC declares R1-billion in dividends
Pretoria Portland Cement (PPC) has celebrated an outstanding trading year to end
September by declaring total dividends of more than R1-billion.
SA`s largest cement and lime producer reports exceptionally strong cash flows
and has declared a final dividend of 700 cents (2003: 550 cents) a share. PPC`s
capital expenditure is planned to remain low next year. It has therefore also
declared a special dividend of 1 400 cents (650 cents) a share. Together, the
dividends amount to a cash payout of R1 129-million.
Last year PPC was also exceedingly generous with ordinary and special dividends
totalling R645-million. Notwithstanding these large payouts, the group is
comfortably liquid with current cash reserves of over R1-billion.
Headline earnings per share for the year grew 27% to 1463,2 cents a share (2003:
1154,0 cents). Although operating profits grew 35%, lower investment income and
a higher effective tax rate limited the growth in headline earnings.
The improved performance derives from increased domestic cement demand, improved
levels of infrastructural investment, interest rate cuts and a continuous focus
on creating value through the group`s Value-Based Management process, `Kambuku`.
Domestic cement demand was higher than expected, resulting in a 14% improvement
on 2003. Volume growth was recorded throughout the country, with the coastal
region between Cape Town and Port Elizabeth the most buoyant, thanks to the
Ngqura (Coega) Harbour Project, which saw the Port Elizabeth operation running
at full capacity with additional supplies sourced from inland factories. It is
expected that Ngqura demand will start reducing from the last calendar quarter
of 2004.
`Our Kambuku process continues to reap rewards. As a company that prides itself
on being a key component of building this nation, we continue to look at ways to
create stakeholder value. This is evident in the improvement in operating
profit which exceeded revenue growth,` commented John Gomersall, PPC`s chief
executive officer.
Group operating profit increased by 35%, with the cement margin reflecting an
improvement on the back of higher volumes, combined with improved cost control
and production efficiencies. The lime and packaging margins were in line with
the previous year.
Highlighting employee commitment was PPC`s achievement of 2nd overall and 1st in
its sector in the Deloitte / Financial Mail Best Company to Work For 2004 survey
(ranked 6th overall in 2003).
`This demonstrates that we have a professional workforce, committed to improving
operational performance that directly translates into improved value creation
for all stakeholders,` said Gomersall.
The Cement division reported a 40% increase in operating profit, from R740,6-
million in 2003 to R1 038,2-million this year, benefiting from significant
growth in volumes.
Operating profit in the Lime division increased by 3% to R101,9-million (2003:
R98,8- million) in the wake of improved efficiencies and tight cost control,
despite a decline in burnt product volumes.
The growth in cement demand had a direct impact on the Packaging division, which
grew operating profit by 16%, from R26,9-million to R31,2-million. Gomersall
said that the cement sack growth, together with volume growth in the ream wrap
market, had increased volumes by 18%, ahead of the industry average.
`It has been an exciting period for the Packaging division. We celebrated the
sale of a 75% stake in the packaging business to an empowerment consortium in
August this year and we look forward to our partnership with the ladies at
Nozala and the Afripack management` he said. Owing to the structure of the
deal, PPC will continue to consolidate the results until the loans have been
repaid.
Recently advised rail tariff increases that are significantly above inflationary
levels will increase production costs, particularly in the Lime division. The
increase in PPC`s cost index of inputs at a higher level than the official
Producer Price Index (PPI) will inevitably have an impact on selling prices.
Looking forward, PPC forecasts cement demand to increase by 6% to 8% during the
next financial year. The forecast derives from:
- Government`s stated intention of increasing infrastructural investment;
- Lower interest rates;
- Continued growth in the formal housing sector; and
- Ongoing expansion in the informal housing sector.
Volumes in Zimbabwe are expected to remain at low levels until the elections in
March 2005. Lime volumes have the potential to increase based on the potential
growth in the domestic steel industry output.
The outlook for 2005 remains positive and PPC expects to report improved
profits. Strong cash flow is expected to continue with minimal capital
expenditure planned for the next financial year.
The planned inland cement capacity expansion project will only begin to impact
on cash flows from 2006 onwards.
Ends
Issued by:
Andrea Visser
Meropa Communications
Tel : (011) 772-1031
On behalf of:
Pretoria Portland Cement (Pty) Ltd
Contact:
John Gomersall, chief executive officer
Tel : (011) 445-1015
Date: 04/11/2004 09:40:35 AM
Produced by the JSE SENS Department
