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Cement manufacturer PPC anticipates a 4% to 8% year-on-year increase in cement sales, largely thanks to strong demand in Zimbabwe and Rwanda.
But in a notice to shareholders on Wednesday morning, the group - which is a leading supplier of cement in southern Africa - said it has "yet to experience any meaningful uplift in cement sales from the government's designation related to the use of locally produced cement on government projects".
"Except for some limited road construction and rehabilitation activity, there have been no large infrastructure projects," it said.
However, it was upbeat about future potential, saying it was "well-positioned" to benefit from this "potential boost in cement demand once the infrastructure programme gathers momentum".
Late last year, government announced new regulations on the use of cheaper imports of the building material on state projects. South Africa’s cement industry, which includes companies like PPC, AfriSam, Sephaku Cement and Lafarge Industries, has been battling against a flood of imports. The industry has anti-dumping tariff protection against cement imported from Pakistan but Vietnam has been a problem.
Despite the progress it has made, cement imports continue to be a threat to the group, with cement from Vietnam increasing by 11% year-on-year, exceeding pre-pandemic levels. The cement manufacturer estimates that imports make up about 10% of South Africa cement sales.
On Wednesday, the group said the biggest sales volume growth in the year ending 31 March 2022 came from its Zimbabwe and Rwanda operations, which had double-digit increases, while South Africa and Botswana saw a single-digit uptick in sales.
"Relative to the twelve months ended 31 March 2020 [pre-Covid-19], Group cement sales are expected to increase by 11% to 15%. The Group’s materials businesses also experienced a recovery in demand with year-on-year growth in sales volumes," said PPC.
In South Africa and Botswana, PPC’s sales saw an increase in demand from the rural and informal markets as people turned to home improvement during the pandemic. However, the cement producer said the growth came at a "normalised" rate after a post-Covid-19 jump in demand.
Inland construction of distribution centres and a surge in mining activity also led to some growth in demand.
Industrial construction demand recovered in the coastal region, but the group’s sales were still below the pre-pandemic period.
