Bank of America Merrill Lynch Investor Conference. Sun City, South Africa, March 2010

Transcription

1 Bank of America Merrill Lynch Investor Conference Sun City, South Africa, March 2010

2 Contents Part 1 Industry perspective Cement industry overview 3 Regional industry demand 4 Regional demand outlook 6 Regional supply & demand 9 Part 2 PPC information Marketing plans 11 Overview of costs 12 Capital expenditure 13 Projects 14 Lime and aggregates 16 Gearing and dividends 19 Addendum Project announcements 22 2

3 Cement industry overview Harare Namibia (2012) Botswana Gaborone (Mill) Zimbabwe Bulawayo (Mill) Colleen Bawn Dwaalboom Slurry Lichtenburg Hercules Dudfield Jupiter Mills Mozambique Matola Ulco Durban (Mill) Simuma Sino Cement Saldanha (Mill) De Hoek Riebeeck Port Elizabeth 3

4 2009 Regional industry demand proportion of sales* Botswana Current demand in Zimbabwe adds 3-4 % to historical regional demand Namibia 5% 3% Limpopo 10% Gauteng North West 6% 30% Mpumalanga 8% 1% Free State Northern Cape 2% 3% 1% KwaZulu Natal 16% Eastern Cape 7% < 5% 5-10% >10% Western Cape * Based on regional industry sales Jan 09 to Oct 09 8% 4

5 2009 Regional industry demand growth/decline* Botswana Namibia +4% -5% Limpopo +14% Gauteng North West -8% -22% Mpumalanga -12% Free State Northern Cape -13% -15% KwaZulu Natal -3% Total Total regional regional demand demand -13%* -13%* month month average average = = 13.1Mt 13.1Mt * Based on regional industry sales Jan 09 to Oct 09 Western Cape -31% Eastern Cape -12% Exports +100% to 207kt* Exports +100% to 207kt* 5

6 2010 Regional demand outlook Demand remains weak but most leading indicators have turned: GDP forecast RMB/BER business confidence index FNB building confidence index Building plans passed Manufacturing output +3.7% in Jan 2010 Government s continued commitment to infrastructure spend R400bn non-governmental project announced in past year GFCF remains close to key level of 25% of GDP Key drivers for demand increase: Return to more normal residential building activity Especially in metropolitan areas around Gauteng and Western Cape provinces Has traditionally made up + 30% of overall demand Speed of implementation of large infrastructure projects Most construction firms commenting on delayed implementation 6

7 Longer term regional demand outlook Government infrastructure plan (~R850bn) 54% (R450bn) to public enterprises, majority cement intensive projects Eskom R309bn (Medupi, Kusile, Ingula, national electrification programme) Transnet R49bn (Pipeline, Iron-ore line, Ngqura container depot) Sanral R29bn (GFIP phase 1,2&3, coal road network - Mpumalanga, Limpopo) TCTA* R17bn (Olifants river development plan, Moloko dam) ACSA R6bn (Airport upgrades) Government departments (~R200bn) Public works R4.5bn (Upgrade of border posts, disabled facilities) Health R11.5bn (22 hospital upgrades and 1 new hospital) Correctional serv. R4.9bn (Upgrade & renovation of prisons, staff accomm.) Police R3.9bn (new forensic lab, stations, shooting ranges) Human settlements R100bn (N2 gateway, various integrated housing projects) Transport R46.7bn (Roads, passenger rail, Gautrain) Water affairs R9.4bn (De Hoop dam phase2) 7

8 Regional demand outlook PPC has to date supplied 70,000 tons of cement to the Medupi Power Station project (March 2010) 8

9 Regional supply and demand Mt Industry demand* Industry maximum capacity* Capacity excluding old PPC kilns* Latest Revision : March Cimpor 0.6Mt/yr, PPC 1.25Mt/yr, Afrisam Mill 0.4Mt/yr Lafarge 1Mt/yr PPC Mill 0.3Mt/yr, 90% utilisation 70 to 80% utilisation Growth 7.4% -3.9% -13%? -ve? 6%? * Excludes demand and capacity in Zimbabwe 9

10 Regional supply and demand Future capacity increases Ohorongo Cement (Namibia) 600kt/yr, construction in progress with commissioning estimated 2012 Sephaku Cement (South Africa) 2.2Mt/yr, funding needs still to be secured for this R3.3bn project estimated

11 PPC s pricing & marketing philosophies Pricing Current price levels are correct to generate the necessary returns for reinvestment in facilities and new capacity Prices should therefore follow industry input cost inflation Price is much more significant than volume Current market is more dynamic but pricing has been maintained To maintain pricing and volume PPC has significantly increased its marketing drive Renewed branding, promotions and point of sale materials Innovative customer competitions in South Africa and Botswana Enhanced products/specifications in key market segments Significantly increased focus on exports 11

12 Updated overview of cement & energy costs Cement, delivered 2009 % of total cost Distribution costs including fuel ~27 Coal including delivery to plant ~12 Maintenance ~10 Electricity ~5 Energy costs A 25% electricity cost increase would result in a 1.25% direct impact on total costs. Indirect impact from other input costs yet to be determined Coal costs trending up, coal price FOB Richard s Bay +30% since October 2009 July 2010 price increase will be dependant on cost trends in H

13 Capital expenditure update (2010/2011 replacement capex under review due to lower activity) Dwaalboom Kiln 2 (Batsweledi) expansion Hercules Mill (Ntšhafatso) expansion Riebeeck (Se Kïka) expansion Other expansion projects Expansion capex Replacement capex Environmental capex PPC Zimbabwe Total capex

14 Update on major projects Ntšhafatso (Hercules mill upgrade) Vertical roller mill energy efficient Still within budget (R700m) Still zero lost time injuries for the project March Commissioning is in progress Se Kïka (new Riebeeck plant) Still awaiting approval of EIA Minimal capex in Revised demand allows more flexibility with timing Re-engineering of plant and capex estimates is in progress View of the clinker (left) and cement (right) silos Ntšhafatso Project 14

15 Ntšhafatso: Electric energy efficiency Typical old mill Output ton per hour Energy consumption kwh/ton New Ntšhafatso VRM mill* Output 120 ton per hour Energy consumption 31 kwh/ton Figures are based on milling CEM I * Figures based on contractual performance guarantees 15

16 Update on Lime & Aggregate divisions Demand and outlook for Lime & burnt products positive Primarily affected by increased demand from local steel and alloy industries Recovery of input cost inflation (contractual) has been realised Aggregate volumes stable Favourable geographic locations of our quarries Specific product offerings 16

17 PPC Zimbabwe Utilisation remains 45% to 50% (± t/yr) Selling prices in line with regional prices Commenced with plant (clinker cooler) upgrade at Colleen Bawn Exports to Botswana and Zambia continue Bulawayo Plant 17

18 Competition Commission No significant new developments relating to PPC since our announcement during November 2009 In terms of its leniency agreement, PPC continues co-operating with the Competition Commission 18

19 Gearing & Dividends Current gross debt to EBITDA cover of 1.2 times is well within our conservative target of 2 to 3 times cover Dividend cover will remain in the target range of times normalised earnings Slurry Plant 19

20 PPC Investment Case Leading producer with good geographical spread Strong long-term infrastructural demand outlook New capacity available Cash generative Excellent dividend yield history Strong balance sheet Financial strength to explore expansion opportunities Experienced management team 20

21 PPC Executive directors Paul Stuiver CEO Age 53 : years service Peter Esterhuysen CFO Age 53 : years service Salim Abdul Kader MD SA Cement - Appointed Dec 2009 Age 40 : 6 years service Harley Dent Director Lime, Aggregates & Zimbabwe Age 59 : 32 years service Sello Helepi Director OP & transformation - Appointed Dec 2009 Age 38 : 3 years service 21

22 Addendum

23 Contacts Paul Stuiver Kevin Odendaal Chief Executive Officer Executive Investor Relations Tel

24 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 views. By their nature, forwardlooking statements involve risk and uncertainty and although PPC believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government action and business and operational risk management. While PPC takes reasonable care to ensure the accuracy of the information presented, PPC accepts no responsibility for any consequential, indirect, special or incidental damages, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or negligence arising in connection with a forwardlooking statement. This document is not intended to contain any profit forecasts or profit estimates, and the information published in this document is unaudited. 24