PPC Ltd. is weighing expansion into new markets as South Africa’s biggest cement maker seeks to draw a line under a tumultuous two years that included an emergency rights issue and takeover interest from competitors.
Since taking the top job in July, Chief Executive Officer Johann Claassen has reviewed the company’s operations and balance sheet, with a particular focus on boosting liquidity and extending debt maturity, he said in an interview in Bloomberg’s Johannesburg office. “We had to steady the ship and make it sustainable,” he said. “Now we need to get a new pipeline of projects.”
New investment would follow a 12 billion rand ($995 million) outlay on five plants in the past half decade, which took PPC into countries including Ethiopia and the Democratic Republic of Congo from its South African base. All are now in operation and generating cash, said Claassen, 58, allowing the company to consider new facilities.
East Africa is a particularly fast-growing region, while an abundance of projects in Ivory Coast implies a high demand for cement in the West African country, Mokate Ramafoko, PPC’s head of Africa operations, said in the same interview.
While he and Claassen declined to identify specific markets PPC will expand into, Ramafoko said Kenya had a shortage of cement clinker plants and Uganda also looked promising, with new projects coming up.
The plan marks a step change in the strategy of PPC, which raised 4 billion rand from shareholders in 2016 to service debt after S&P Global Ratings cut its credit rating to junk.
That came during a perfect storm of heavy investment in new projects and slowing economic growth and falling prices in its home market, which accounts for about 70 percent of sales.
Looking ahead, the company sees the potential for growth, both at home and internationally, as it seeks to repay shareholders for the faith shown during the rights issue.
To read the full article, click here.