South Africa’s Biggest Cement Producer Sales Volumes Drop

PPC

VENTURES AFRICA – Cement sales volumes sagged in South Africa, Botswana and Zimbabwe in the 12 months to September, it was announced on Tuesday.

South Africa’s cement sales volumes were hit by the transport sector strike while Botswana’s sales tanked due to the slowdown in government’s infrastructure spending. Zimbabwe’s high costs of electricity battered sales volumes during the period.

Pretoria Portland Cement Co. (PPC), South Africa’s biggest lime and cement producer with operations in most of the Southern African Development Community (SADC) region, confirmed this at its results presentation in Johannesburg.

But it said the group revenue surged 8 percent to 7.3 billion rand ($830 million) during the period with improved selling prices compensating for lower sales volumes.

PPC said in South Africa, cement sales volumes declined 1 percent due to a subdued last quarter of the financial year.

Paul Stuiver, the CEO of PPC, said the quarter proved challenging because of the transport strike and heavy rains which reduced cement sales.

Last month, South Africa’s labour minister Mildred Oliphant personally intervened to end the damaging three-week long transport sector strike, drawing attention to the effect of the strike on the public at large.

The strike came at a cost of 1.2 billion rand ($137 billion) to employers a week and also lost workers 276 million rand ($31 million) in weekly wages, according to the Road Freight Employers’ Association.

The strike was characterised by violence and intimidation of non-striking workers and had hit fuel, grocery and fresh produce deliveries in South Africa and Zimbabwe.

Stuiver said in Botswana cement sales volumes decreased due to a combination of a lower industry demand and increased competitive activity.

“The decline in the industry demand can be attributed to the slowdown in government spending on infrastructure projects,” Stuiver said.

In Zimbabwe, industry demand continued its growth trajectory. But the double digit increases in the prices of electricity, diesel and salaries offset this growth.

“The cost of production in Zimbabwe was further influenced by a six week production interruption due to the failure of a transformer in February this year,” Stuiver said.

“This required a clinker to be imported from our South African operations, thereby incurring additional costs.”