UPDATE 1-S.Africa's PPC down on earnings outlook

Wed Apr 20, 2011 4:34am EDT

Related Topics

* Construction industry taking strain - analyst

* M&R rebounds from two straight days of losses

* PPC shares down 4.12 pct

(Adds analyst comment, background)

By Gugulakhe Lourie

JOHANNESBURG, April 20 (Reuters) - Shares in PPC (PPCJ.J) dropped more than 4 percent in early trade on Wednesday after the earnings forecast for South Africa's biggest cement producer disappointed investors.

Difficulty in finding new construction projects and tighter private sector spending contributed in PPC forecasting a 35-40 percent decline in first-half initial profit.

"It's a bit of a shocker," Abri du Plessis, chief investment officer at Gryphon Asset Management said. "I just shows you that sector is struggling. The construction sector is taking pain."

The outlook led its shares to fall by more than 4 percent in early trade. By 0820 GMT, it was at 24.44 rand, underperforming a 0.86 percent firmer JSE All-share index .JALSH.

Rival Murray & Roberts (MURJ.J) rebounded on Wednesday, up 1.36 percent at 25.42 rand, after dropping more than 7 percent in the last two sessions on industry woes that include suspected bid rigging.

The stock dropped 5.44 percent to close at 25.01 on Monday after M&R said executives of its unit Concor Ltd may have transgressed the Competition Act. [ID:nLDE73H1MY]

Smaller rival Group Five (GRFJ.J), which on February 14 posted a 21 percent drop in first-half profit, was slightly up 0.07 percent and Aveng (AEGJ.J) was down 0.03 percent.

The JSE construction and materials index .JCONM was down 0.89 percent in early trade.

Meanwhile Sephaku Cement, a unit of Sephaku Holdings (SEPJ.J), said on Wednesday it will build a 3,000 tonne per day clinker and cement plant in South Africa.

"We remain firmly of the view that the South African growth story is not yet over, and that it has legs deep into the future," Sephaku managing director Pieter Fourie said. (Editing by Jon Herskovitz)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.