South Africa-based cement manufacturer PPC has begun the search for a new CEO following Johan Claassen’s decision to take early retirement.
The announcement coincides with PPC unveiling strong financial results for the six months ended 30 September 2018 – with major highlights being an 8% rise in group revenue to ZAR5.6 billion (about US$407 million), largely due to a 4% increase in total cement volumes to 3.1 million tonnes.
Jabu Moleketi, who spoke on behalf of the PPC board, says following an evaluation of the leadership of the company, PPC made several changes to the composition of the board to balance the need for change, while ensuring board and company stability going forward. Following this process, it became apparent that the company faced a set of short-term challenges and opportunities. This led to a detailed evaluation of the executive bench, individual and collective skills of the leadership body and the development of succession plans to align the leadership with the strategic needs of the firm going forward.
During the six-month period to September 2018, the executive committee was restructured to achieve accountability geographically, and enhance the effectiveness of group services into these geographies. It was during the course of this exercise that Claassen expressed an interest to take early retirement.
“The company’s policy makes provision for such circumstances, and accordingly the company has agreed to accommodate this request," says Moleketi. "The board has therefore initiated a process to find a new CEO. Claassen is fully committed to the role of CEO until such time as a new CEO is found.
“The board would like to thank Claassen for his commitment, hard work and loyalty to PPC, its shareholders, employees and customers. Under his leadership, PPC has built a strong customer-focused organisation. His industry expertise and relationships have been invaluable resources and he has served the company with courage during a challenging period. The board will work closely with him to ensure a smooth transition when we find a suitable replacement.”
Claassen was appointed permanent CEO early this year after serving on an acting basis for several months following Darryll Castle’s sudden resignation in July 2017 amid takeover bids from multiple companies. During his interim tenure, Claassen was hailed for overseeing a number of important milestones, including the successful stabilisation of the business, an improvement in efficiencies following the completion of key projects and the strengthening of PPC’s financial position.
He also leaves PPC in a strong financial position. “We have produced resilient results by navigating extremely challenging trading conditions. Our diversified portfolio has enabled us to offset the weaker South African performance with robust growth in our rest of Africa segment,” says Claassen.
"During the six months to 30 September 2018, PPC’s operations in the rest of Africa showed a growth in volume of 34% while revenue increased by 36% to ZAR1.7 billion. EBITDA grew by 18% to ZAR499 million. “Robust volume growth in Zimbabwe and a positive contribution from the Democratic Republic of Congo (DRC) underpinned the pleasing performance."
PPC Zimbabwe grew revenue by 30% to ZAR1.1 billion on the back of a 29% increase in volumes. The performance was supported by an upsurge in construction activity, as well as successful implementation of the route-to-market strategy and other sales initiatives.
In the DRC, PPC Barnet’s route-to-market initiatives supported the achievement of a market share ranging between 25% and 30% and ZAR240 million in revenue, while the benefits of right-sizing the business and stringent cost controls delivered EBITDA of ZAR60 million.
Habesha Cement in Ethiopia, which is still in the ramp-up phase, delivered over 300,000 tonnes of cement during the period. It however contributed a net loss of ZAR19 million as performance was constrained by the political environment and heavy rainfall in the second quarter.
Claassen adds that the first phase of the upgrade of the CIMERWA plant in Rwanda, aimed at increasing capacity, was completed and record volumes towards the end of the period contributed to strong growth. Revenue of ZAR402 million and EBITDA of ZARR92 million were achieved.
“We expect trading conditions in South Africa and the DRC to remain difficult," says Claasen. "However, we should benefit from a steady performance in Zimbabwe, improved output from CIMERWA and stable political environments in Ethiopia, while the DRC elections are a key milestone to unlock latent infrastructure demand."