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PPC Aims for Africa Sales Beyond South Africa to Rise to 50%

Pretoria Portland Cement Co., South Africa’s largest maker of the building material, said it’s aiming to increase sales from the rest of the continent to 50 percent in the next five years.

The contribution from Africa, excluding South Africa, has doubled in the past two years to about 20 percent, Chief Executive Officer Paul Stuiver said in a telephone interview today. The Johannesburg-based company plans to boost the proportion to 50 percent by 2016, he said.

PPC is seeking expansion in new markets on the rest of the continent as growth in Africa’s largest economy has slowed and pricing competition from new entrants has increased.

Outside of South Africa, Zimbabwe and Botswana contribute the most to sales, Stuiver said. Mozambique, Zambia, Ethiopia, Southern Sudan, Kenya and the Democratic Republic of the Congo have also been identified as future growth areas.

PPC is “actively working on” four expansion opportunities into other regions in Africa, Stuiver said. One of these has resulted in a $44 million conditional offer for a 58 percent stake in Cimenterie Nationale, a government-owned cement producer in the Democratic Republic of the Congo. PPC plans to have local partners in its sub-Saharan Africa projects, said Stuiver, who wouldn’t identify the other countries for projects because of “third-party confidentiality agreements.”

Debt Financing

Funding for expansion in Africa may come from South Africa and Europe, he said. PPC may use debt financing so that “demand on cash is not that severe.”

In South Africa, PPC has agreed to buy an initial 25 percent of Pronto Holdings, a readymix and fly ash supplier based in Gauteng province. The rest of Pronto will be bought by PPC over two years, with the total transaction valued at 280 million rand ($35 million) less debt.

PPC today said net income for the 12 months through September fell 22 percent to 785 million rand as sales rose 0.3 percent 6.83 billion rand. The total dividend fell to 1.30 rand a share from 1.75 rand a year earlier.

The company’s shares rose 3 percent to 25.63 rand in Johannesburg, paring this year’s decline to 27 percent and giving PPC a market value of 15 billion rand.

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