Continued growth in South African cement demand from rising levels of infrastructural spending and buoyant housing construction prompted by lower interest rates helped Pretoria Portland Cement (PPC) to a 33 per cent increase in headline earnings per share to 587.7 cents in the six months to March 2004. In view of the company’s strong cash position, and current low level of capital expenditure, PPC has declared an interim dividend of 220 cents. On prospects, the Directors noted: The current growth in cement demand should enable the company to report increased operating profits and cash flow for the full year. The year on year rate of increase in the second half is however likely to be lower than that achieved in the first half
Chief Executive, John Gomersall added, "Although the continued growth in cement demand has assisted us in attaining these results, I must stress the role that our Value Based Management (VBM) and Kambuku programmes have played in reducing costs and maintaining ongoing productivity improvements." Operating profits increased by 37 per cent to R517.4m (2003: 52 per cent), which meant an operating margin of 31.7 per cent (2003: 26.9 per cent). This improvement came despite a decline in the Lime division.
The 15 per cent increase in domestic cement sales and the 27 per cent revenue growth resulted in the cement division achieving a 47 per cent increase in operating profit from R312.3m to R460.6m. Strong volume growth was experienced in Gauteng, the Western and Southern Cape regions with the Coega Harbour project and associated development in the Eastern Cape leading to record sales in that region for March. Following the unexpected growth of cement volume in the first half of the year, especially during the months of February and March, PPC believes that the local cement market will settle down but may achieve growth of 8 per cent to 10 per cent for the financial year double the original forecast made in December 2003.
