Johannesburg - Pretoria Portland Cement (PPC) on Wednesday moved to clarify erroneous reports that it was guilty of price fixing by admitting it had taken part in market share arrangements.
The R19bn cement producer is cooperating with the Competition Commission in a probe on illegal activities which include peer group companies LaFarge Industries South Africa, Afrisam and Natal Portland Cement Cimpor. (See PPC confesses to cartel activity.)
According to Efficient Group economist Dawie Roodt, market share arrangements involve competing producers agreeing to work in separate markets where they can dominate. Price fixing involves the activity of agreeing to a single price for the market.
Said Paul Stuiver, PPC's recently-appointed CEO: "It's only market share arrangements," adding that a short investigation was required to uncover the illegal activities of three former employees during the 1990s.
"We're both surprised and hugely disappointed from PPC's side, and apologise for being involved in something like this," said Stuiver.
He was speaking at the announcement of the group's annual results ended September, in which earnings were down a quarter. However, analysts said PPC's financial performance was ahead of consensus, an achievement the Competition Commission inquiry had cast a pall over.
"The results were actually ahead of consensus," said Vestact's Sasha Naryshkine. If a black economic empowerment charge had been taken out, the earnings would be higher than a year ago. In a depressed market, this was an achievement, he said.
He said that the group's ability to run bigger, more efficient plans and turn off smaller, older and inefficient plants helped save costs in times where volumes were lower.
Revenue came in at R6.8bn for the year while operating profit - before factoring in the cost of a black empowerment deal - was 4% higher at R2.4bn. Profit declined by a quarter to R1.128bn.
Said an unnamed analyst: "The results are good, but they're overshadowed by the Competition Commission news".
Another analyst said the dividend, at 200 cents per share, may have disappointed shareholders, as it represented 11% decline year-on-year.
Citing Stuiver, news agency I-Net Bridge reported on Wednesday that both facilities at PPC's wholly-owned Zimbabwean subsidiary, Portland Holdings, were in good condition.
Speaking at a presentation of the group's results, Stuiver pointed to its Zimbabwean operations as having been consolidated into the group accounts from end-September 2009.
"Both facilities near Bulawayo are in good condition and fully staffed, and utilisation levels have improved significantly from below 10% in the first part of the calendar year to between 35% and 45% currently," said Stuiver.
Shares in PPC were 1.85% higher in Wednesday mid-afternoon trade on the JSE. The share was last trading at 3310c/share.
Additional reporting by Jana Roos
- Fin24.com