While Johan Claassen, who has been appointed permanent CEO of PPC, does not foresee any major changes for the company this year, he notes that particular attention will be paid to the company’s financial position this year.
This, he explained, falls in line with the company’s strategy to renegotiate its debt maturity profile and liquidity position, while also aiming to provide an update on the company’s third black economic empowerment transaction by the end of March.In 2016, PPC shareholders approved a proposal to issue additional shares for a planned R4-billion ($289-million) rights issue as the company was seeking cash to reduce debt.This enabled the company to raise funds after a credit rating downgrade to “junk” status by ratings agency Standard & Poor’s.
This, Claassen added, positioned the company in a “little bit of a liquidity constraint”, which affected the company’s investments into the rest of Africa.Also affecting the company’s debt maturity profile, however, is a shrinking market in the Democratic Republic of the Congo (DRC) after PPC commissioned and established an integrated cement manufacturing facility with a capacity of one-million tonnes a year.
While operations remain sound, Claassen notes that optimisation opportunities still remain for the company’s African operations, especially in its South African Safika operation, which the company acquired about five years ago.The company further aims to save around R50/t on its input costs going further.”It’s safe to say that PPC is currently cash positive, and we’re aiming to continue running the company on a cash-positive basis so as to not negatively impact the rest of the company,” he averred.
Commenting on the controversial merger and acquisition deals that garnered shareholder opposition last year, Claassen noted that, while nothing has changed in this respect, the company may consider similar deals moving forward.In addition, he highlighted that the company is currently considering a head office restructure.He concluded that PPC has a “well-defined” strategy and that it would focus on delivering on that strategy this year.