Shares in PPC, the maker of cement, aggregates, ready-mix and fly ash, were having their best day in nearly five weeks on Monday after the group said it expected profit to rise by almost a fifth in its half-year to end-September.
Headline earnings per share (HEPS) for continuing operations for the six months are expected to rise as much as 18% to between 20c-23.5c, the group said, with its shares leaping as much as 7.87% in response to its highest level since September 25.
PPC has a R5.9bn market cap on the JSE.
Earnings per share are expected to also be 20c-23.5c, between 11% and 31% higher.
The improvement in EPS is due to an overall reduction in the group’s administration and other operating expenditures in the SA and Botswana group, which partially offset a weaker performance in Zimbabwe, increased investment income due to higher average cash balances in the current period and a non-recurrence of a pretax R53m impairment in the prior period.
This was partially offset by a higher tax charge with the effective tax rate at 33% from 25% before.
The prior period results will be re-presented to disclose discontinued operations — Cimerwa in Rwanda — separately from continuing operations, it said.
PPC financial statements for the six months to end-September are expected to be released on or about November 18.
Business Day reported in September that the group, which is pushing ahead with turnaround plans to improve its key SA and Botswana businesses, has lamented the lack of significant retail or infrastructure projects, saying the construction downturn persists despite positive sentiment and declining interest rates.
PPC’s aggressive recovery plan has focused on rebuilding and exiting noncore markets in Eastern and Central Africa to concentrate on growing the margins, operational efficiencies and cost reductions of the core Southern African operations.
It also counts on the government to level the playing field concerning cement imports that jeopardise the viability of the local industry and set up procedures that will give preference to local cement for government-funded infrastructure projects.
The government has earmarked more than R940bn to be invested in public infrastructure over the medium term to drive a range of projects in six sectors in a bid to boost the economy and reduce unemployment.
However, the JSE-listed firm said there were few large-scale infrastructure developments, reporting that group cement sales volumes in the four months to end-July, including Zimbabwe, were 5.3% lower than the previous comparable period. Cement sales volumes in SA and Botswana continued their downward trajectory, decreasing 4.6% during the period.
“Though interest rates in SA have begun to decline and local sentiment is improving, there is still no clear evidence of large-scale infrastructure or retail developments,” PPC said in a trading update. “Consequently, the overall outlook for the SA and Botswana group remains subdued.”
SA’s construction sector has remained relatively weak since the swirl of the 2010 World Cup. Expenditure growth has been declining with an average real growth of 2%, according to the Treasury. The sector did, however, record a rise in activity in the second quarter of 2024, the Afrimat construction index shows.
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