The PPC cement business has a successful record spanning 126 years as the leading supplier of cement in southern Africa. With the most extensive footprint in the region, PPC’s cement business is well placed to efficiently serve the market through its proximity and optimised operational efficiencies.
PPC’s southern Africa cement business continues to hold steady in a challenging operating environment. This is characterised by muted growth in South Africa’s economy, ongoing risk of a ratings downgrade, pressure on consumer spending as inflation ticks higher and low infrastructure spend with very few new projects coming on line in the civil and building sectors.
PPC’s volume movement in South Africa was better than the industry average, despite a particularly depressed first quarter in 2018. Even though imports in the coastal region rose approximately 30% in 2018, exacerbated by the strengthening local currency (rand), PPC’s strong brand equity and service assisted in withstanding pricing pressures and maintaining market share.
In Botswana, cementitious demand decreased, but PPC’s volume recovered well to end marginally down on the prior year as the business continued to deliver sustainable cost savings and focused on growing selling prices.
Key priorities in the period
PPC’s three mega-plant strategy is being embedded at our Slurry plant near Mafikeng, Dwaalboom in Limpopo, and in the Western Cape:
- Phase 1 of the Slurry complex (SK9) is complete. Phase 2 is under way to install dustabatement facilities that will ensure the SK8 plant is modernised and compliant to environmental standards. Old units will be retired, improving the landscape
- Dwaalboom is among the youngest plants in the PPC stable (kiln 1 is 22 years old; and kiln 2 under 10 years). Operational efficiency initiatives are under way to strategically and optimally serve its market
- Western Cape operations have focused on optimising efficiencies in energy use to better serve the market, introducing refuse-derived fuel in addition to the tyre-burning project currently in phase 2
- PPC is retiring the Port Elizabeth kiln, Jupiter kiln and Hercules kiln to maintain these sites as key milling depots. This also ensures we achieve our environmental compliance objectives
Innovation in PPC’s product portfolio, a key driver of our route-to-market strategy, as well as aligning our aggregates, ash and readymix operations as part of our channel strategy business has assisted in maintaining our foothold and share of the market.
In line with the group strategy (page 8), our focus over the next 12 to 18 months will be on accelerating progress in the following areas:
- Continued revenue enhancement through margin-improvement initiatives, an enriched product portfolio and implementing route-to-market strategy
- Driving operational efficiencies through cost containment and optimal sourcing
- Continued innovation in alternative energy solutions
- Cultivating a high-performance culture
PPC’s southern Africa performance and prospects are most sensitive to macro-economic conditions. These appear positive, buoyed by an improved political outlook in the region. Although the market remains very tight, we believe this positive sentiment and expectations of economic recovery will materialise and translate into growth. We continue to focus on our strategic priorities, ensuring PPC is well positioned to take advantage of projected growth by continually improving our offering to customers.