Pretoria - Booming national demand for cement has led PPC, Barloworld's listed cement and lime subsidiary, to plan for the investment of an estimated further R3 billion in boosting its cement capacity by 2009.
John Gomersall, PPC's chief executive, yesterday said board approval had been granted to accelerate the plans to expand and modernise its capacity in the Western Cape, which would complement the capacity upgrades under way in the inland region.
The planning phase of a significant state-of-the-art cement milling facility in the inland region was also in progress, he said.
"Estimated capital expenditure for these two projects, if approved, could be in the region of R3 billion and would be incurred over three years commencing during the next financial year.
"The further resultant increase in output won't, however, become available until late 2009 and 2008 respectively."
Gomersall said it was difficult to tell how long the planning would take because the process involved environmental impact assessment studies.
The planned new capacity expansion comes after PPC embarked on its R1.23 billion Batsweledi project in August last year. This assignment involved the installation of a new kiln line and related infrastructure at its Dwaalboom cement factory in Limpopo and a further R130 million on recommissioning and upgrading the existing cement milling facility at the Jupiter factory in Johannesburg.
The recommissioning of the Jupiter kiln was successfully completed in the March quarter and will provide an additional 550 000 tons of cement capacity a year, while the additional 1.25 million tons a year capacity at Dwaalboom is expected to come on stream in the second quarter of 2008.
The planned capacity expansion announcement coincided with PPC reporting a 52 percent increase in headline earnings a share to R9.22 in the six months to March.
Gomersall said this increase reflected the benefit of the reduced secondary tax on companies charge on the special dividend paid in January this year, which accounted for 12 percentage points of the headline earnings a share improvement, but would have a reduced impact on the full-year result.
Group revenue increased by 20 percent to R2.2 billion and operating profit by 33 percent to R855.6 million while the cost of sales declined by 14 percent.
Cash generated from operations rose by 29 percent to R822.8 million and an interim dividend of R3.30 a share was declared, up 27 percent.
Gavin Bantam, a Nedcor Securities analyst, said PPC had produced very good results, which came in at the upper end of market expectations.
The shares gained R2.99 to R433, while the building materials sector rose 0.66 percent.