Our view of the market

PPC has positioned itself in regions that show strong or improving GDP growth, low urbanisation and low per-capita consumption of cement. These key metrics are fundamental to ensuring sustainable businesses in the regions in which we operate.

Solid economic fundamentals driving demand

Outlook

SA

  • SA’s trading and regulatory environment remains challenging and will impact revenue prospects for SA cement, readymix, aggregates and lime
  • A disciplined approach to growing price and volume, together with driving operational efficiencies, should yield results

RoA

  • Zimbabwe, DRC and Ethiopia: political developments are encouraging and should heighten confidence in the construction market
  • Expect strong demand to continue in Zimbabwe and Rwanda, and further ramp-up in DRC and Ethiopia
  • Plant modifications in Rwanda will bolster growth through improved ability to meet demand

Group

  • Reduced capex, coupled with significantly lower interest rate charges, expected to improve free cash flow

Group remains well positioned to benefit from growth in the regions in which it operates

Cash-generation prospects are excellent

DEMAND IS DRIVEN BY GDP GROWTH, URBANISATION AND STAGE OF ECONOMIC DEVELOPMENT

Sources:

NKC, IMF
AFDB Statistics, 2016
World Cement Report


Risk matrix – shorter term

 

Social/political

 

Economic

 

Regulatory

 

Impact on PPC

 
  • New leadership
  • EODB* ranking 82
 
  • Lower forecast GDP
  • Lack of fixed investment
 
  • Policy framework uncertainty>

 
  • Lower target returns
Zimbabwe  
  • New leadership
  • EODB* ranking 159

 
  • Improving forecast GDP
  • Liquidity constraints
 
  • Policy framework uncertainty
 
  • Target returns achievable
Rwanda  
  • Stable government
  • EODB* ranking 41
 
  • Stable GDP growth
 
  • Policy framework certainty

 
  • Target returns achievable
DRC  
  • Leadership uncertainty
  • Social instability
  • EODB* ranking 182
 
  • Lower forecast GDP
  • Liquidity constraints
 
  • Policy framework uncertainty
  • Challenging tax environment
 
  • Lower target returns
Ethiopia  
  • Leadership change
  • EODB* ranking 151
 
  • Strong GDP growth historical and forecast
 
  • Policy framework certainty
 
  • Target returns achievable
* Ease of doing business ranking – source: World Bank
High risk   Medium risk   Low risk