| |
| News Releases |
 |
Barloworld Ltd (ticker: BAW, exchange: )
News Release -
24-Aug-2004
Barloworld cement subsidiary PPC announces one million tonne capacity expansion plan Barloworld's listed cement and lime subsidiary Pretoria Portland Cement Company (PPC) has today announced plans to expand its cement capacity in South Africa by 1 million tones per annum. For the six-month period ended 31 March 2004, PPC contributed 30% of Barloworld`s headline earnings and at that date Barloworld owned 70.1% of PPC`s issued shares.
PPC's announcement said:
"In the light of recent and future anticipated cement demand growth, and the planned future retirement of older PPC production lines, the PPC Board has resolved to commence with the planning for and broad approval in principle of, a 1 million tonne per annum cement capacity expansion project for the inland region of South Africa.
The board has accordingly approved capital expenditure of R6m to be incurred in the first phase of planning the expansion during the forthcoming financial year to 30 September 2005. This will include the scoping of the project and the updating of equipment prices to ascertain the total project cost. The project will most likely be a "brownfields" project (an expansion of an existing facility) and the estimated present day value is approximately R750m. This excludes inflation, project management and commissioning costs and finance during construction.
The project and its cash flow will most likely span the 2006, 2007 and 2008 financial years. A further announcement will be issued when the project is finally approved and before any major commitments are made."
Commenting on the announcement Barloworld executive director and PPC CEO, John Gomersall said, "the recent rise in fixed investment in the South African economy, together with our Government`s commitment to raising the future level of fixed investment to 25% of GDP is very encouraging and essential for the higher economic growth that the country requires to create much needed jobs. Since 2000, through our global competitiveness programme and better utilization of existing capacity we have been able to improve returns to acceptable levels. This was an important factor in this decision given the capital intensity and demand volatility of the industry. It has given our board the confidence to invest in the modernisation and expansion of capacity and will ensure that we continue to play our part in South Africa's economic development."
Barloworld CEO Tony Phillips said; "This move is part of our strategy of expanding our cement business and maintaining our position of market leadership in South Africa. PPC's returns exceed our 8% real cash flow return on investment (CFROI) hurdle rate and we anticipate that such an investment will be value accretive once complete in approximately 2008."
For background information visit www.barloworld.com or contact Mark Drewell, Head of Corporate Communication ph +27 11 445 1204 e-mail mdrewell@barloworld.com |
|
|
|
Barloworld Ltd
