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PPC Profit Rises 10% on South African Cement Sales Growth

Nov. 19 (Bloomberg) -- PPC Ltd., the largest cement maker in South Africa, said full-year profit climbed 10 percent after sales increased in its home market while the company will step up expansion on the continent.

Net income rose to 931 million ($92 million) in the 12 months through September from 846 million rand a year earlier, the Johannesburg-based company said in a statement today. Earnings per share excluding one-time items climbed 16 percent to 2.15 rand, beating the 2.04-rand median estimate of three analysts surveyed by Bloomberg. PPC declared a final dividend of 1.18 rand a share, boosting the total pay-out to 1.56 rand.

PPC is expanding in Africa through acquisitions to offset competition in its domestic market. The company will have new plants operating in the Democratic Republic of Congo, Rwanda and Ethiopia by the end of 2015, boosting capacity by more than a third to as much as 11 million metric tons.

The company expects to announce a “significant” new project in the first quarter of next year, Chief Executive Officer Ketso Gordhan said in a phone interview today. It may involve PPC starting its own venture somewhere in a previously untapped African market, or an investment in existing operations.

“You will see equal expansion in west and east Africa in time,” he said, declining to be more specific about where PPC is planning to expand next year. “We are being very picky. We want to choose areas where demand is huge and supply is low.”

Continued Demand

PPC shares have dropped about 5.3 percent this year, making the stock the worst performer on the seven-member FTSE/JSE Africa Construction & Building Materials Index, which has gained about 6.3 percent. PPC rose 1.5 percent to 32.39 rand as of the close of trading in Johannesburg.

“2014 should be OK with low volume growth from continued demand from retailers and private sector-led growth,” Gordhan said. “We’re more optimistic about 2015.” Government infrastructure projects should boost profit by then, he said.

PPC revenue increased 13 percent to 8.32 billion rand, the company said. South African cement sales volumes rose by 7 percent while sales in neighboring Zimbabwe recorded double-digit growth.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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