PPC wants to expand ready-mix production

PPC plans to acquire 3Q Mahuma Concrete, the largest independently owned ready-mix concrete supplier in southern Africa, for a maximum of R183 million.

Darryll Castle, the chief executive of PPC, said yesterday that it intended to conclude an asset for shares agreement with 3Q Mahuma to further progress PPC’s ready-mix channel management strategy.

3Q Mahuma has branches in Limpopo, North West, Northern Cape, Mpumalanga and Mozambique. The acquisition would complement PPC’s Pronto Readymix business that only had a footprint in Gauteng, Castle told a Merrill Lynch conference at Sun City.

The planned acquisition is in line with the new vision announced by PPC in November for the company to become a world-class supplier of materials and solutions into the basic services sector and establish a vertically integrated materials business.

Castle stressed in November that 70 – 80% of PPC’s focus would remain on cement, but over time it would get earnings and revenue that was not currently core to its business.
Castle said yesterday that the PPC’s vision was to become “a major player in Africa and then globally”.

Castle added that there was significant pressure on selling prices in most regions, with declines of 5 percent recorded in the South African cement business.

Overall margins were under pressure, despite good cost control, exchange rate gains and contributions from the group’s profit improvement programme, he said.

He said finance costs were up “markedly” due to the commissioning of the Cimerwa plant in Rwanda, but PPC was concluding the disposal of some non-core assets that would lead to inflows of over R100 million by the end of this month.

PPC’s expansion into Africa resulted in the commissioning of a new plant in Rwanda in August, with further plants scheduled to be commissioned in the DRC and Zimbabwe by the end of this year and in Ethiopia in the second quarter of next year.

PPC is also building a new 1 million-ton-a-year kiln for between R1.5 billion and R1.7bn at Slurry, which is expected to be commissioned in 2018.
Shares in PPC slumped 4.1 percent on the JSE yesterday to close at R13.81.

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