{"id":833198,"date":"2025-07-28T14:00:00","date_gmt":"2025-07-28T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=833198"},"modified":"2025-07-28T13:49:46","modified_gmt":"2025-07-28T11:49:46","slug":"dark-clouds-gather-for-one-of-south-africas-oldest-companies","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/833198\/dark-clouds-gather-for-one-of-south-africas-oldest-companies\/","title":{"rendered":"Dark clouds gather for one of South Africa’s oldest companies"},"content":{"rendered":"\n

Cement maker PPC has noted that it faces a tough operating environment in South Africa due to high interest rates and strained household income, which have put pressure on residential building plans.\u00a0<\/p>\n\n\n\n

PPC is one of South Africa\u2019s oldest companies. It was incorporated in 1892 as the first cement manufacturer in the country.<\/p>\n\n\n\n

PPC has long been part of the country\u2019s development, supplying cement for major projects such as the Union Buildings, Cape Town Stadium, and the original concrete stands at Loftus Versfeld. <\/p>\n\n\n\n

Today, the company produces around 11.5 million tonnes of cement annually across sub-Saharan Africa, but its legacy status hasn\u2019t shielded it from the current economic headwinds.<\/p>\n\n\n\n

The cement giant\u2019s latest annual report painted a concerning picture. South Africa\u2019s private construction sector is grappling with high interest rates, sluggish household income growth, and limited public infrastructure spending. <\/p>\n\n\n\n

\u201cThese macroeconomic headwinds were especially pronounced in South Africa, where the formal construction sector continues to face big structural and financial challenges,\u201d said PPC. <\/p>\n\n\n\n

The company highlighted that South Africa remains far below the global average of cement use, consuming just 228kg per capita compared to the worldwide average of 540kg. <\/p>\n\n\n\n

The company noted that this is a sign that there is room for growth if infrastructure investment gains momentum.<\/p>\n\n\n\n

The company is also contending with unfair competition from cheap cement imports and a carbon tax regime that disadvantages local producers. <\/p>\n\n\n\n

\u201cThe disparity in carbon tax enforcement between domestic manufacturers and importers remains a source of unfair competition that warrants urgent policy attention,\u201d PPC said.<\/p>\n\n\n\n

Despite these pressures, the company is trying to focus on performance and capital discipline. <\/p>\n\n\n\n

PPC added that informal building activity, industrial developments, and possible public-private partnerships have emerged as bright spots. <\/p>\n\n\n\n

PPC noted that these segments provide small but meaningful opportunities in regions like South Africa, Zimbabwe, and Botswana.<\/p>\n\n\n\n

Building confidence has taken a hit in South Africa <\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

PPC chairman Jabu Moleketi added that logistics inefficiencies and electricity supply issues have further burdened the company\u2019s operations. <\/p>\n\n\n\n

\u201cElevated interest rates for most of the year constrained construction activity and weakened consumer demand,\u201d he said. <\/p>\n\n\n\n

\u201cOngoing logistics inefficiencies, particularly along key rail corridors, forced greater reliance on road transport. This increased operating costs and added pressure to already strained road infrastructure.\u201d <\/p>\n\n\n\n

Although the electricity supply showed signs of stabilisation, the consistency and predictability of energy access remain essential for uninterrupted operations. Looking forward, Moleketi pointed to potential tailwinds. <\/p>\n\n\n\n

\u201cThe start of a downward interest rate cycle, combined with growing private sector participation and renewed public infrastructure commitments, including those outlined in the 2024 State of the Nation Address, suggests a more supportive outlook for the construction sector,\u201d he said. <\/p>\n\n\n\n

However, recovery may not be immediate, as evidenced by the latest FNB\/BER Building Confidence Index. <\/p>\n\n\n\n

After a slight gain in the first quarter of 2025, the index fell five points to 36 in the second quarter, meaning nearly two-thirds of respondents remain dissatisfied with prevailing conditions.<\/p>\n\n\n\n

Building sub-contractors, main contractors, and hardware retailers reported the steepest drops in sentiment. <\/p>\n\n\n\n

Main contractor confidence fell to its lowest level since the third quarter of 2022, primarily due to further weakness in the residential sector. <\/p>\n\n\n\n

According to Stats SA, the real value of spending on residential buildings dropped by 8.4% year-on-year in the first quarter. <\/p>\n\n\n\n

\u201cThe residential building sector is under pressure. Respondents noted a deterioration in activity and overall profitability,\u201d said Siphamandla Mkhwanazi, Senior Economist at FNB.<\/p>\n\n\n\n

Mkhwanazi also noted that order books are thinning, indicating that the strain may persist in the short term. <\/p>\n\n\n\n

Non-residential construction, however, is faring better. \u201cThe non-residential building sector is now outperforming the residential building market significantly in growth,\u201d he said.<\/p>\n\n\n\n

He attributed this performance to both a low base and increased demand for office and industrial space.<\/p>\n\n\n\n

Early-stage activity indicators were more encouraging. Quantity surveyors saw business confidence climb to 50, its highest since 2017, on the back of increased activity. <\/p>\n\n\n\n

\u201cWork at the start of the building pipeline is clearly gaining momentum,\u201d Mkhwanazi said. \u201cHowever, like with current activity, it seems as if it is largely focused on the non-residential sector.\u201d<\/p>\n\n\n\n

However, Mkhwanazi cautioned that even upbeat sales forecasts for the next quarter may fall short. <\/p>\n\n\n\n

\u201cSome of the factors that contributed to better sales in the preceding quarters, particularly the consumer income windfall from the two-pot retirement system, will likely be less pronounced going forward.\u201d<\/p>\n\n\n\n

\u201cThese developments point to the potential for long-term sectoral recovery, although their impact will depend on consistency,\u201d said Moleketi.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cement maker PPC faces a tough operating environment in South Africa due to high interest rates and pressure on household income.<\/p>\n","protected":false},"author":92,"featured_media":833217,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[76,12699,853],"class_list":["post-833198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-fnb","tag-ppc","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=833198"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833198\/revisions"}],"predecessor-version":[{"id":833256,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833198\/revisions\/833256"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833217"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=833198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=833198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=833198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}