Displaying items by tag: Hodna Cement

South Africa: PPC has announced that in the first-half of its 2014 financial year, which ended in March 2014, its profit grew by 52% as the company consolidated its foreign units and increased its exports to counteract declining domestic sales.

Net income for the six months grew to US$47.2m from US$31.1m for the same period in 2013. Operating earnings before a number of one-time items rose by 3% to US$84.6m, while sales grew by 9% to US$398m.

Cement sales in South Africa were negatively impacted by a platinum mining strike and heavy rains during the period. Sales volumes in the north west of the country, where many of the platinum mines are located, fell by 25% in the first six months of PPC's reporting period and are not expected to recover in the near future.

"Improvements in export sales and the consolidation of sales from our Rwanda operation and newly-acquired Safika Cement business were partly offset by declining sales volumes in South Africa and Botswana," said chief executive Ketso Gordhan. PPC said that it remains optimistic that cement sales volumes will improve.

To combat a slow domestic market, PPC is expanding across Africa, including in countries such as the Democratic Republic of Congo (DCR), Zimbabwe, Algeria and Mozambique, to boost foreign sales to 40% by 2017.

PPC said that Zimbabwe's economic slowdown had caused 'in-country liquidity constraints,' resulting in a fall in cement demand. Despite the slowdown, analysts have said that the country's infrastructural deficit presents immense opportunities for cement makers. PPC is investing US$12.4m to expand its cement plant in the country and plans to construct a 0.70Mt/yr cement plant under its subsidiary, PPC Zimbabwe. PPC also plans to retire two 'less-efficient' mills at its Bulawayo plant. "The new mill in Harare gives a competitive advantage and a phased capital expenditure approach reduces risk," said Gordhan.

Gordhan said that PPC plans to construct a US$200m clinker plant on the border with Mozambique and a cement plant in Tete, Mozambique.

In the Democratic Republic of Congo (DRC), PPC is investing US$280m to build a 1Mt/yr cement plant in the west of the country. The plant is currently under construction. PPC will assume 69% ownership of the plant, while the Barnet Group will own 21% and the International Finance Corporation will own 10%.

Hodna Cement Company, in which PPC has a 49% interest, plans to construct a 2Mt/yr cement plant near Sétif, Algeria to be constructed by China's Sinoma. "We are optimistic that we will be on site by the end of 2014," Gordhan said. Algerian cement demand is estimated at 22Mt/yr.

Algeria: PPC announced its advanced plans for entry into the Algerian cement market on 24 February 2014, through a partnership with Algerian private investors that would see it own a 49% stake in the Hodna Cement Company.

The transaction will be funded on a project finance basis, with 80% debt funding from local banks, according to PPC. The stake, which was bought for an undisclosed amount, will see PPC assume management control of Hodna, allowing for the consolidation of the financial results of the project into the PPC group accounts.

According to PPC, Hodna will construct a 2Mt/yr cement plant for US$350m in the Hodna area, which is roughly 300km east of Algiers. PPC is already building cement plants in Ethiopia, Rwanda and the Democratic Republic of the Congo.

"This project sees us entering yet another African country and gives us confidence that by 2017, 40% of PPC revenues will be earned outside of South Africa," said CEO Ketso Gordhan.

"The Algerian cement market is very attractive, as consumption exceeds local production by approximately 3Mt/yr. Moreover, the Algerian government has committed itself to large-scale capital spending programmes, including the US$6bn New City Hassi Messaoud project, which will see the rollout of thousands of housing units," he said, adding that this would "certainly boost the demand of cement in this country."

The company said that once the feasibility study has been concluded, construction of the plant will take up to 30 months, with commissioning anticipated by the fourth quarter of 2016. As with its other expansion projects, PPC said it would engage China's Sinoma International Engineering as the contractor to supply and build the plant, supported by India's Holtec Consulting.

"With a population of close to 40 million people, of which 74% live in urban areas, combined with a relatively high GDP/capita of US$5582, Algeria still requires the construction of 225,000 housing units per year to meet demand. The national housing shortage in Algeria is estimated at 1.2m units," stated PPC.

Algeria: South African cement firm PPC has announced that it will buy a stake in an Algerian cement company as part of its drive to boost sales outside its home market.

PPC said that it will buy a 49% stake in Hodna Cement, which plans to construct a US$350m plant in the country. PPC did not disclose how much the deal will cost, but said that it will be funded on a project finance basis, with 80% of the debt to be sourced from local Algerian banks.

"This project sees us entering yet another African country and gives us confidence that by 2017, 40% of PPC revenues will be earned outside of South Africa," said PPC CEO, Ketso Gordhan. PPC is also constructing cement plants in Ethiopia, Rwanda and the Democratic Republic of Congo.