The company also declared a special dividend of 61c per share from 77c last year.
Announcing results for the year to September, CEO John Gomersall said sustained economic growth and strong performance within the residential and nonresidential construction sectors were fuelling continued demand for cement.
Buoyant market conditions meant PPC had to import cement, accounting for about 5% of its total sales, to meet customer demand, said Gomersall.
Group revenue rose 19% to R5,6bn from R4,6bn, operating profit rose 17% to R2,2 billion (R1,8 billion) and headline earnings per share increased 16% to 263c a share (226c). Cash generated from operations increased 8% to R2,2 billion from R2 billion.
Gomersall said: “We are pleased with another good set of results on the back of continued growth in cement volumes. Regional cement sales volumes grew 10% over the past year, and as a result our operations ran at high utilisation levels to meet customer demand.”
Gomersall said strong cash flows and low borrowings relative to Ebitda (earnings before interest, taxes, depreciation and amortisation) cover ratios would enable the company to take on more debt to fund expansion projects.
“We remain focused on maximising our efficiencies, though this has not been without its challenges due to increased energy, transport and maintenance costs,” said Gomersall.
The company spent R953 million on expansion compared with R396 million in the previous year.
“We are on track for the commissioning of the new capacity at the Batsweledi plant (in North West) early next year, which should result in less reliance on imports to meet the higher demand. Additional inland cement milling capacity will also come on stream mid-2009 on completion of the new milling facilities at the Hercules factory in Pretoria,” said Gomersall.
A feasibility study of capacity requirements in Western Cape was progressing well, but had been delayed by the environmental impact assessment and regulatory approval process.
“Specification of equipment and plant layout has continued, and the delay is not expected to have an impact on our ability to supply the cement demand in this region over the medium term,” said Gomersall.
The PPC board approved the structure and likely funding of the black economic empowerment transaction announced at the group’s annual general meeting in January. The structure would include equity ownership by staff, communities and industry associations via various trusts, and strategic black partners.
“We are in the final phase of concluding the transaction and anticipate seeking shareholder approval early next year,” said Gomersall.
Despite recent interest rate hikes, he believed growth in low cost housing projects and fast- expanding infrastructural construction activity would offset any residential slowdown.