Ppc Limited · JSE:PPC
Ppc — FY2013 Earnings Presentation
42 slides from Ppc's earnings presentation, Nov 19, 2013
Slide 1: Final Results for 30 September 2013
Final Results for 30 September 2013 19 November 2013 Ketso Gordhan - CEO Tryphosa Ramano - CFO Richard Tomes - Joint MD (SA) Njombo Lekula - MD Zimbabwe 1
Slide 2: Agenda
Agenda Context Financial Overview Divisional Overview Strategy & Outlook Questions 2
Slide 3: Context
Context • For the financial year ending September 2013 • PPC’s total cement sales up 7% • Supported by strong volume growth in SA and Zimbabwe • Botswana and Mozambique remain under pressure • PPC margins under pressure • Input costs higher due to electricity prices, depreciation and sub-optimal sou
Slide 4: Context
Context • For the financial year ending September 2013 • PPC SA’s cement volumes up 7% • This compares favourably to SA cement industry sales - up 4.2% for 9 months from October 2012 to June 2013 • Growth achieved despite deceleration in GFCF Gross Fixed Capital Formation: % change 30 25 20 15 10 5
Slide 5: Context: key events
Context • Key events • Progress on rest of Africa projects • Significant progress with construction at CIMERWA Ltd, Rwanda • Construction of 1.4 mtpa plant in Ethiopia has commenced • Construction of 1 mtpa plant in the DRC to start in Q1 2014 • Final bankable feasibility in Zimbabwe/Mozambique unde
Slide 6: Strength beyond the Bag
Strength beyond the Bag Building a Sustainable Corporate • Kambuku Revitalisation • Profiling SB Cement (age 53) • Factory Operator Support • Years of service: 24 • FY 2013 basic salary: R6 854 • FY 2013 total cost: R9 657 • 2013 salary increase (6.5%): R 446 • Management Investment: R 875 • FY 2014
Slide 7: Financial Overview
South Africa Botswana Zimbabwe Mozambique Financial Overview 7
Slide 8: F2013 – Financial overview
F2013 – Financial overview • Revenue R8.32bn 13% [R7.35bn] • EBITDA # R2.50bn 8% [R2.33bn] • EBITDA margin # 30.1% [31.7%] • Cash generated from operations R2.89bn 26% [R2.28bn] • Normalised operating profit # R1.98bn 6% [R1.87bn] • Normalised earnings per share# 214 cps 16% [185 cps] • Normalised H
Slide 9: F2013 – Summary income statement
F2013 – Summary income statement 2013 2012 % Impacted by sub-optimal R million R million Change sourcing due to Revenue 8 316 7 346 13 Dwaalboom technical Cost of sales 5 546 4 809 (15) 1 issues and Slurry mill Gross profit 2 771 2 537 9 upgrade. Also increases in Administration and other operating
Slide 10: F2013 – Segmental analysis
F2013 – Segmental analysis Revenue split per division Revenue split per region 4% 10% 24% Cement South Africa Lime International Aggregates 76% 86% Sept Sept Sept Sept EBITDA margin Revenue (R million) 2013 2012 2013 2012 Cement 32% 33% Cement 7 183 6 209 Lime 20% 23% Lime 798 838 Aggregates 14% 19%
Slide 11: F2013 – Summary balance sheet
F2013 – Summary balance sheet 2013 2012 R million R million CIMERWA plant ASSETS expansion and Non-current assets translation impact of foreign subsidiaries Property, plant and equipment 5 522 4 483 4 Intangibles and goodwill 333 139 Other non-current assets 556 376 5 Further investments in Current
Slide 12: F2013 – Summary cash flow statement
F2013 – Summary cash flow statement 2013 2012 R million R million Cash flow from operating activities Operating cash flows before movement in working capital 2 486 2 317 Net movement in working capital 399 (33) 9 Good working capital management Net finance costs paid (247) (216) Taxation paid (525)
Slide 13: F2013 – Capital expenditure
F2013 – Capital expenditure Total for 2013 2012 FY2014e R million R million R million Western Cape modernisation (De Hoek) 7 160 - Slurry modernisation 73 17 100 Zimbabwe 141 43 120 Operational capex 348 389 500 – 600 Capital expenditure before expansions 569 609 700 – 800 CIMERWA 385 - 750# DRC 10
Slide 14: F2013 – Effective taxation rate
F2013 – Effective taxation rate • The effective taxation rate was 35.3% mainly due to the impact of IFRS 2 charges, Zimbabwe indigenisation expenses, non-deductibility of finance costs on BBBEE I transaction and combined with withholding taxes on dividends received 2013 Rm Profit before taxation 1 4
Slide 15: Capital structure
Capital structure • F2013 net debt to EBITDA of 1.5x, committed to keeping this < 3x • Restructuring of R1 billion BBBEE I debt • PPC assigned SA national scale long-term and short-term credit ratings of zaA+ and zaA-2, respectively, by Standard & Poor’s • Successfully established a R6 billion domes
Slide 16: Divisional Overview
South Africa Botswana Zimbabwe Mozambique Divisional Overview 16
Slide 17: SA Cement
SA Cement Richard Tomes: MD Cement RSA Johan Claassen: MD Cement RSA • HND (Civil Eng), • BEng (University of Stellenbosch), • MBA (University of Stellenbosch) • EDP (Wits Business School) Combined PPC experience of ~40 years 17
Slide 18: F2013 – Segmental analysis
F2013 – Segmental analysis Revenue split per division Revenue split per region 4% 10% 24% Cement South Africa Lime International Aggregates 76% 86% Sept Sept Sept Sept EBITDA margin Revenue (R million) 2013 2012 2013 2012 Cement 32% 33% Cement 7 183 6 209 Lime 20% 23% Lime 798 838 Aggregates 14% 19%
Slide 19: PPC SA cement demand
PPC SA cement demand • PPC’s F2013, SA sales volumes up 7% • Strong volume growth in Gauteng and inland region, despite increased industrial action • A number of commercial property developments under way in Gauteng, including: • Cradlestone Mall (West Rand) • new office buildings in Sandton • phase
Slide 20: SA cement demand – Imports
SA cement demand – Imports • Imported cement now accounts for an estimated 7.6% of national demand as at June 2013 • Bulk of imports continues to originate from Pakistan, majority enter through the port of Durban • FOB price per bag ex-Pakistan remains ~R30/bag Cement Imports# 350 000 300 000 250 00
Slide 21: PPC SA cement input costs
PPC SA cement input costs Key cost Proportion of Cost components for cost of sales Movement F2013 (R/t) (R/t) Input costs up 6% on a rand per Distribution 27% +8% ton basis Salaries (R) 10% +5% Energy related costs: diesel + coal + electricity = 28% Depreciation (R) 9% +8% of all input costs Electri
Slide 22: PPC SA modernisation programmes
PPC SA modernisation programmes De Hoek kiln 6 upgrade – R280m (2012) • Heat consumption and the clinker production rate improved by 5% • Significantly improved stack emissions • 60% water saving (see case study) Slurry finishing mill 4 upgrade – R100m • Improved mill reliability and production outp
Slide 23: Lime, Aggregates and Readymix
Lime, Aggregates and Readymix Lime • Difficult year for PPC Lime; major customers encountered operational interruptions • Led to a drop in burnt product sales of 8% with limestone sales reduced by 15% • Revenues fell 5% to R798 million (2012: R838 million) • Volumes recovered in the second half of t
Slide 24: Outlook
Outlook • Trading conditions in South Africa remain challenging and a new competitor is set to enter the market • PPC remains focused on: • Improving and optimising current capacity • Recently right-sized operations in the coastal regions • Continuing to focus on most efficient plants • Seeking out
Slide 25: Zimbabwe Cement
Zimbabwe Cement Njombo Lekula: MD Zimbabwe • Over 20 years PPC experience • ND Chemical Engineering (Vaal University of Technology) • MBA (University of Stellenbosch) Zimbabwe • Celebrated 100 years of production in Zimbabwe • Portland Holdings Limited has been an integral part of Zimbabwe’s infrast
Slide 26: Zimbabwe Cement
Zimbabwe Cement • Robust sales environment in F2013 - double digit volume growth • Cement price increases were marginal due to increased competitor activity • Retail sector remains the key driver of local demand • Operations performed well: • Improving both output and quality of product • Increased
Slide 27: Botswana and Mozambique
Botswana and Mozambique Botswana • Botswana economy remains heavily dependent on the diamond mining industry • Government has scaled back on infrastructure projects, focus on maintenance • Privately funded developments in the new central business centre of Gaborone continue, with increased tender ac
Slide 28: Strategy & Outlook
South Africa Botswana Zimbabwe Mozambique Strategy & Outlook 28
Slide 29: PPC International
PPC International Pepe Meijer: MD International • BEng (Mech), BB&A (Hons), MBA (University of Stellenbosch) Happy-Girl Buthelezi: Exec Head: Business Development • BCom, MBA (UCT Graduate School of Business), Diploma in tax (ICIE), Postgraduate in management accounting (University of Natal) Koos Ta
Slide 30: Rest of Africa strategy
Rest of Africa strategy • Great opportunity exists in many African countries • South Africa’s annual per capita cement consumption is 222kg • The countries we have invested in, have levels well below 75kg per capita • Growth trajectory in these countries remains very positive Per capita Cement consu
Slide 31: Democratic Republic of the Congo
Democratic Republic of the Congo • PPC to construct a 1 mtpa plant 20km from Kimpese in western DRC for ~$260m • Construction to commence in Q1 2014 and commissioning anticipated in 2016 • In-country production of ~500 000 tpa with demand 4-6 times in excess • Cement trades at price range of ~US$400
Slide 32: Zimbabwe/Mozambique
Zimbabwe/Mozambique • Final bankable feasibility underway, busy with the EIA study • Intend to construct a clinker production facility towards the Zimbabwean border • Intend to construct two cement grinding facilities; Harare (800 000) and Tete (400 000) • Construction likely to commence in late 201
Slide 33: Habesha Cement, Ethiopia
Habesha Cement, Ethiopia • PPC has increased shareholding from 27% to 30% for R16 million • Construction of the 1.4 mtpa facility has just begun • Commissioning to occur 24 months later • Project cost remains favourable at US$130 million • Factory site well located, 35km north- west from Addis Ababa
Slide 34: CIMERWA Limited, Rwanda
CIMERWA Limited, Rwanda • PPC acquired a 51% equity stake in CIMERWA at the end of 2012 • Only cement producer in Rwanda, with 100 000 ton per annum plant • New 600 000 ton per annum plant under construction, to be commissioned in 2015 • Will have 5 stage pre-calciner kiln and use peat as an energy
Slide 35: CIMERWA Limited, Rwanda
CIMERWA Limited, Rwanda Progress on the new 600 000tpa plant 35
Slide 36: CIMERWA Limited, Rwanda
CIMERWA Limited, Rwanda Progress on the new 600 000tpa plant 36
Slide 37: Outlook
Outlook Three years ahead • 2014: • expect significant progress on the four projects under way; • limited volume growth in SA and limited impact from new entrant • 2015: • tough year due to significant capex drawdowns and full year impact of new entrant; • some optimism for volume growth in SA • 201
Slide 38: Questions?
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Slide 39: Investor contacts
Investor contacts Ketso Gordhan Chief Executive Officer Tryphosa Ramano Chief Financial Officer Azola Lowan Investor Relations Tel. +27 11 386 9000 www.ppc.co.za 39
Slide 40: Addendum: Southern African cement industry map
Addendum: Southern African cement industry map 40
Slide 41: Strategy Overview
Strategy Overview PPC’s strategies are: 1. Enhance our industry leader position in southern Africa (“Keeping the home fires burning” strategy) Excel in sales, marketing, customer focus and overall value offering Efficient operations and optimised logistics Renew/upgrade equipment, especially relatin
Slide 42: Disclaimer
Disclaimer This document including, without limitation, those statements concerning the demand outlook, PPC’s expansion projects and its capital resources and expenditure, contain certain forward- looking statements and views. By their nature, forward-looking statements involve risk and uncertainty