PPC of South Africa Profit Falls Ahead of Vote to Fire BoardKamlesh Bhuckory
PPC Ltd., South Africa’s biggest cement company, said it expects shareholders to retain the board at a vote next month even as profit declined on falling sales in its domestic market.
Investors representing about 10 percent of stock called for a vote after Chief Executive Officer Ketso Gordhan resigned in September following a dispute with his fellow directors. Gordhan will use the Dec. 8 meeting to try to return as CEO at the head of a new management team.
“We are confident that the shareholders are not going to be removing the board in its entirety,” Chairman Bheki Sibiya said by phone today. They will support “the growth that we have delivered into the African continent.”
Net income fell to 849 million rand ($76.4 million) in the year through September, PPC said in a statement. The company cut the full-year dividend by 27 percent to 1.14 rand per share. The shares fell as much as 7.2 percent to 25.02 rand, the lowest intraday price since June 2013, and traded down 3.6 percent as of 11:58 a.m. in Johannesburg.
PPC is expanding in African countries such as the Democratic Republic of Congo and Algeria, where demand for cement outstrips supply, and plans to have 40 percent of sales outside its home market by 2017. Gordhan said earlier this month the company will struggle to continue the growth plan because a deal to obtain $200 million of funding is close to collapse, an argument Sibiya says isn’t true.
In South Africa, PPC cement sales volumes were down 2 percent as economic growth slowed, cement imports increased and a five-month strike in the platinum mining industry hampered projects. More than 70 percent of PPC sales still come from Africa’s second-biggest economy, Sibiya said.
The drop in profit “is indicating a rather challenging business environment even for cement, lime and aggregates,” Sibiya said. “It stems from South Africa.”
Gordhan fell out with existing directors after they blocked his attempt to fire Chief Financial Officer Tryphosa Ramano, who Sibiya said retains the support of the company. Replacing the board would require the support of more than 50 percent of the shares voted at the meeting.
PPC shares have declined 20 percent since Sept. 19, the trading day before Gordhan’s resignation was announced, compared with a 2.2 percent fall on South Africa’s benchmark index.
PPC is in the process of recruiting a new CEO and will make an appointment before Christmas, Sibiya said.