PPC chief executive Roland van Wijnen sits down with the BizNews team to unpack the cement manufacturers recent restructuring and refinancing update. The Dutchman has done an impressive job turning the debt-laden business around as a capital raise via a rights issue is off the table. Roland, an experienced international corporate executive, talks about the unique challenges of doing business in South Africa. He also shares his thoughts on broader macroeconomic issues as well as the fundamentals for the cement industry going forward. – Justin Rowe-Roberts
Roland van Wijnen on the restructuring and refinancing update:
The announcement marks an important milestone in a process that has been going on now for a good year and a half at least. It’s one of the last steps. So among them were a good performance of the underlying business. And secondly, a successful completion of the divestment of our lime division, which we expect to close and proceeds flowing in October. And by that, we should have a strong balance sheet without the need for the rights issue.
On which African jurisdictions it’s operating in:
So we continue to operate in all the areas where we’re currently at, meaning Botswana, Zimbabwe, DRC, Rwanda and a minority in Ethiopia. What we have done, though, is restructuring our DRC business – the underlying business, PPC Barnet – we continue to operate on behalf of the owners, but the economic benefits will largely stay with the lender until the current loans have been paid back. But no more recourse to the group in South Africa, which was important to us.
On the operating environment:
Depends a bit on the countries and even within the countries. If you look at South Africa, we do see growth in cement volumes, of course compared to last year when we had the hard lockdown’s that even compared to 2019. However, we see stronger growth in what we call the inland regions – Gauteng, Limpopo, etc. and we see, for example, the Western Cape has been quite hard hit by the absence of tourism and lack of economic activity.
On the broader macroeconomic challenges:
I actually think that we can be moderately positive about the demand for cement. Of course, across the continent, there’s still a lot of infrastructure to be built. I also do not expect that the bankers around the world will slam on the brakes what they’ve been doing because they know the consequences. And if you just look at the energy transition that South Africa is facing, where we most likely will get financial aid, those kinds of things all bode well for construction and therefore for the cement industry in South Africa.
On the difficulties of running a business in South Africa:
One of the things that struck me in South Africa is the lack of our ability to really connect with the government to put in place a strong manufacturing base across South Africa. I think we’re getting there step by step. But from my experience operating in other countries, both in developing and developing environments, the cement industry in South Africa doesn’t yet have the ear of the government that I was used to in some of the other countries.
- PPC avoids rights issue as lenders cement their support
- PPC CEO Roland van Wijnen on financial results, DRC debt
- PPC turns free cash flow positive as turnaround continues
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