Displaying items by tag: South Africa
PPC / AfriSam merger talks in the balance
29 August 2017South Africa: Negotiations between PPC and AfriSam, two of South Africa's biggest cement producers, about a potential merger have reached a make-or-break stage, according to local press, after AfriSam cancelled the heads of terms it had entered into with PPC back in February 2017.
Despite the cancellation of the heads of terms, AfriSam acting chief executive Rob Wessels said the company remained committed to pursuing a transaction and intended to submit a new proposal regarding a possible merger to PPC.
"AfriSam remains firm that a transaction between AfriSam and PPC will greatly benefit the stakeholders of both companies. For this reason, we continue discussions with PPC and will explore other alternatives available to us,” said Wessels. "It remains our belief that a transaction between the two companies offers the local cement industry an opportunity to develop a champion with the required scale, operational efficiency and balance sheet to enable further investment opportunities in South Africa and the rest of the continent."
However, PPC chairperson Peter Nelson said they had been involved in the negotiations for six months and there came a time when it was necessary to halt them. Nelson added that the negotiations would only continue beyond 1 September 2017 if the new proposal tabled by AfriSam was ‘of sufficient interest and attraction and fair to shareholders and warranted extending’ the negotiations. "We can't carry on forever,” said Nelson. “A lot of shareholders are frightened about the prospect.”
PPC reports changes to executive team
23 August 2017South Africa: PPC has appointed Njombo Lekula as the managing director of its Sothern Africa Cement division. The appointment is part of a number of changes to the cement producer’s executive team that have been announced in an operational update for its first financial quarter that ended on 30 June 2017. Mokate Ramafoko has also been appointed as the managing director of the Rest of Africa Cement division and Matodzi Mukwevho has been appointed as the group executive finance and business support officer in support of the chief finance officer.
Previously, Lekula was the managing director for PPC Zimbabwe following his appointment in 2013. An engineer by profession he studied chemical engineering and holds a Masters in Business Administration from the University of Stellenbosch Business School.
Ramafoko holds over 23 years of experience in the cement in the cement manufacturing, quality assurance and cement process optimisation industries. He has held various leadership positions in PPC, including working for Cimerwa in Rwanda, as well positions with Holcim South Africa. He holds a Master’s degree in Business Administration, a BSc and BSc (Hons) Metallurgy.
Mukwevho has held various positions including that of chief finance officer (CFO) at Sasol International Energy responsible for South Africa, Nigeria, Qatar, India and Uzbekistan. He also held the position of CFO at Sasol Polymers in South Africa, Iran, Malaysia, China, Hong Kong and UAE. Matodzi holds a Master’s of Business Administration and is a chartered accountant.
South Africa: PPC estimates that cement demand improved in South Africa during the first half of 2017 following a poor first quarter to the calendar year. It has also predicted that production capacity utilisation rates for the industry as a whole are growing and that they could reach full capacity in 2020. On an adjusted like-for-like basis its cement sales volumes grew by 0.5% year-on-year in the most recent quarter due to good performance in its Coastal and Inland areas. However, imports have continued to decline, by 27%. Outside of South Africa the company has overseen growth particularly in Rwanda, and, in Zimbabwe, the Democratic Republic of Congo and in Ethiopia as well. The company made the announcement as part of an operational update for its first financial quarter that ended on 30 June 2017.
”Our focus is firmly on delivering improved profitability and liquidity in the shorter term while our longer term strategy remains unchanged. More specifically, we will focus our management effort on the new operations in the DRC and Ethiopia, ensuring that they deliver to expectations, while further optimising efficiency in our other businesses,” said interim chief executive officer (CEO) Johan Claassen.
Germany: Schmersal Group has entered into a sales partnership with ScanMin Africa to extend its range of system solutions for the bulk goods industry. Schmersal will add spectral analysis and measurement systems for bulk goods on conveyor belts to its range of integrated system products. ScanMin Africa will distribute safety products made by Schmersal.
“We can now offer extended system solutions that contribute to our customer’s ability to produce more productively and profitably in bulk goods conveying and also the downstream processes,” said Udo Sekin, Business Development Manager Heavy Industry within the Schmersal Group.
Germany’s Schmersal Group develops and produces a range of about 25,000 different switchgear and control devices. South Africa’s ScanMin Africa specialises in the manufacture and distribution of on line process analysers.
Castle to step down as PPC’s CEO
24 July 2017South Africa: PPC has announced that its CEO Darryll Castle will be stepping down to pursue other interests. In a statement PPC said that Castle will remain ‘available’ to the group for six months to ensure a smooth handover. Johan Claassen, the current managing director of PPC, has been appointed as the interim CEO.
PPC reported a 93% fall in full-year earnings in June 2017 due to a liquidity crisis precipitated by the cut in its credit rating to junk status.
Meanwhile, the resignation of Tito Mboweni, one of PPC’s independent non-executive directors has fuelled speculation in the South African press about the ongoing merger discussions between PPC and Afrisam. Some believe that there may be ‘irreconcilable disagreement’ between Mboweni and the wider board about the strategic direction of PPC with respect to Afrisam.
South Africa: PPC has ‘substantially agreed’ the structure and how it intends to implement a new broad-based black economic empowerment (BBBEE) transaction. However, it is waiting for the release of the new mining charter before proceeding, according to the Star newspaper. PPC chief executive Darryll Castle has said that the cement producer’s proposed merger with Afrisam is ‘going on in the background’ and that it would have to assess the impact of the Afrisam transaction on the company's new BBBEE transaction.
South Africa: PPC has blamed its poor performance in its financial year to 31 March 2017 on a poor credit rating from S&P Global Ratings. Its chief executive officer Darryll Castle complained about a liquidity crisis caused by the downgrading of PPC’s credit ratings to junk status by S&P Global Ratings in May 2016. He also attributed the result to falling cement prices in South Africa and poor weather in early 2017.
The cement producer’s earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 13% year-on-year to US$160m for its financial year that ended on 31 March 2017 from US$184m in the same period in 2016. Despite this its sales revenue rose by 5% to US$745m from US$711m and its cement sales volumes rose by 1.6% to 5.54Mt from 5.45Mt.
PPC reported that its 1Mt/yr production line at PPC Slurry is on schedule for commissioning in the first half of 2018. Its 1.4Mt/yr plant in Ethiopia started selling cement in May 2017 and sales are expected to rise as the plant ramps up production.
PPC reports 93% dive in earnings
07 June 2017South Africa: PPC has reported a 93% decline in full-year earnings due to a liquidity crisis precipitated by the cut in its credit rating to junk status during the first quarter of 2017. PPC, which is still negotiating a possible merger with rival Afrisam, said that headline earnings per share fell to just US$0.005 from US$0.083 in the comparable period of 2016.
Nigeria/South Africa: Gas shortages in Nigeria significantly impaired Lafarge Africa’s performance in 2016 in addition to local currency devaluation and a recession. Overall the group’s sales, which include those in South Africa, fell by 18% year-on-year to US$716m in 2016 from US$871m in 2015. Its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 57% to US$94.6m from US$219m. Despite these problems the cement producer’s results rallied in the fourth quarter of the year, aided by changes in fuel supplies and other cost savings.
“Our turnaround plan delivered solid results in the fourth quarter of 2016 in spite of the challenging environment in Nigeria and South Africa. Technical challenges have been resolved with all our plants operating at high reliability. Our energy optimisation plan has proved successful with increased use of alternative fuel to offset gas shortages,” said Michel Puchercos, the chief executive officer of Lafarge Africa. He added that the Mfamosing line 2 is now operational and contributed to cement production in the fourth quarter of 2016. The new line is expected to enhance cost reductions in 2017.
By region, the group’s cement sales volumes in Nigeria fell by 15.4% to 5.29Mt in 2016 from 6.26Mt in 2015. A similar decline in sales volumes was also reported in the fourth quarter. The cement producer declined to provide detailed information on its operations in South Africa saying that the operating environment was challenging and ‘highly’ competitive. It did report that sales volumes of cement fell by 8% in 2016.
South Africa: AfriSam is preparing to replace its chief executive officer (CEO) to aid its merger discussions with PPC. Rob Wessels, a former chief investment officer at AfriSam’s black empowerment partner Phembani Group, is set to replace current Stephan Olivier on a short-term contract, according to sources quoted by Boomberg. The personnel manoeuvring would also potentially place PPC’s current CEO Darryll Castle in a strong position to become the merged company’s new leader. PPC and AfriSam announced that they had resumed merger talks in February 2017 after a previous attempt stalled in 2015.