AFRICA: SOUTH: S.Africa's PPC says cement outlook uncertain

Pretoria Portland Cement, southern Africa's biggest cement maker, warned of uncertain demand, sending its shares lower and underscoring the bleak outlook for construction in Africa's top economy.

PPC, which does most of its business in South Africa and Botswana, said on Tuesday volumes in its home market dropped for the third straight year, hurt by the lack of recovery in residential construction.

South Africa emerged from its first recession since 1992 last year, but has failed to post a convincing growth due to high levels of household debt and shaky consumer demand.

"We simply do not know what to make of the construction market, which is quite depressed," Paul Stuiver, PPC's chief executive, told Reuters, adding the outlook for cement remained "uncertain".

Shares in the company dropped 2.3 percent to 33.51 rand by 0926 GMT, underperforming Johannesburg's All-share index, which was flat.

"The results are rather disappointing. I think they have been pushed up a little bit too far ahead of the results," said David Shapiro, a trader at Sasfin Holdings. "The outlook is still quite negative."

REVENUE FLAT

PPC, which has been producing cement for the last 118 years and has been listed in Johannesburg for a century, said headline earnings per share for the year to end-September rose 28 percent to 217 cents, within its forecast range of a 20 to 30 percent increase.

Headline earnings, which exclude certain one-time items, are the main gauge of profit in South Africa.

While earnings were helped by the non-recurrence of a charge related to a black empowerment deal a year earlier, revenue was little changed, indicating slack demand.

PPC, is looking to further expand in southern Africa, as it faces tougher competition from new entrants into its home market.

Stuiver said PPC was looking for opportunities in Mozambique and other southern African countries. The company may buy existing operations or build new facilities over the next two to three years, he said.

The group may consider selling a stake in its Zimbabwe unit, Portland, to comply with a black ownership law in Zimbabwe.

PPC is gearing up for competition from a Chinese-South African joint venture, which is building a 1.65 billion rand cement plant in South Africa.

It could also face a battle with Nigeria's leading industrial conglomerate, Dangote Group, which has invested 779 million rand to more than treble its stake in local player Sephaku Cement.

Shrinking of the construction industry has already forced cement manufacturer Lafarge SA to initiate a 13 percent cut of its workers at its Lichtenburg plant in South Africa.