SANDTON – PPC expects total Group cement sales volumes for the six months ending 30 September 2021 to increase by 10%-13% year-on-year, with double-digit volume growth in most business units. Relative to the comparable period in 2019, total cement sales are expected to increase by 6%-9%.
The Group’s materials businesses also experienced double-digit year-on-year growth in sales volumes.
SOUTH AFRICA & BOTSWANA CEMENT
PPC expects cement sales volumes in the region to increase by 10%-13% year-on-year for the six months ending 30 September 2021 due to strong retail demand. Relative to the comparable period in 2019, cement sales in the region are expected to increase by 3%-6%. Growth in cement sales volumes in the informal and rural markets continues to outpace other segments of the market.
After experiencing a lagged recovery relative to the inland region, PPC experienced double-digit year-on-year growth in cement sales volumes in the coastal region, albeit from a lower base, with most of the recovery in sales occurring after July 2021.
PPC remains cautious on the outlook for demand in the coastal area due to a slow recovery in commercial construction activity. PPC implemented price increases to offset input cost inflation with realised selling prices increasing by 5%-10% year-on-year for the six months ending 30 September 2021.
Cement imports continue to threaten the sustainability of the South African cement industry, with total imports increasing by 14% year- on-year after adjusting for the impact of the hard lockdown in the prior comparable period. PPC estimates that imports will account for approximately 10% of total industry volumes by the end of 2021.
Although the South African cement industry has experienced an upswing in demand following the initial COVID-19 related hard lockdowns in 2020, total industry demand is below levels that will incentivise new investments in the industry.
In addition, the lack of relief against unfair competition [Dumping] is threatening the financial sustainability of a vital component of the manufacturing and construction sector. It is also eroding the industry’s ability to create jobs.
In conjunction with Cement & Concrete SA (CCSA) and other industry players, PPC is awaiting a decision from the relevant authorities on an application that seeks relief against unfair competition. The application has been updated to include both clinker and cement. PPC is committed to working with all parties to achieve a speedy outcome.
The South African cement industry is also awaiting a decision from the authorities to classify locally produced cement as a designated product, making it compulsory for locally produced cement to be used in government-funded construction projects and to prohibit the use of imported cement in such projects.
Upon implementation, the local cement industry is expected to benefit from increased demand due to the new designation once the Government’s infrastructure build programme gathers pace. PPC continues to work with the relevant stakeholders on this matter.
PPC Zimbabwe continues to trade ahead of expectations despite the challenging macro-economic environment. For the six months ending 30 September 2021, PPC Zimbabwe’s cement sales volumes are expected to increase by 14%-18% year-on-year benefiting from retail demand, increased sales to concrete product manufacturers, and support from Government-funded projects. Relative to the comparable period in 2019, cement sales volumes are expected to increase by 25%-29%.
Cement sales volumes for the six months ending 30 September 2021 are expected to be in line with the prior comparable period. Relative to the same period in 2019, CIMERWA expects cement sales volumes to increase by 7%-10%. Revenue in Rands for the six months ending 30 September 2021 is expected to decline year-on-year due to Rand strength against the functional currency.
PPC expects additional improvements in sales over the coming months as economic activity gathers momentum on the back of improving vaccination rates and infrastructure projects.
Although PPC continues to face uncertain trading conditions, the Group is well-positioned to benefit from growing cement demand in the territories in which it operates. PPC will also continue to take the necessary measures to ensure that it can continue serving its customers, protecting its employees, and implementing strategic initiatives to ensure financial sustainability through all demand cycles.