Rebuilding the PPC behemoth
CEO Roland van Wijnen has a plan to improve the fortunes of cement maker PPC that will include internal changes and an appeal to government for protection from imports
Roland van Wijnen has been at the helm of Africa’s largest cement maker for less than two months, but he has hit the ground running.
Judging by his strong views on cement pricing in SA, the CEO of PPC has familiarised himself with the numerous factors stifling the local cement industry. At his first results presentation last week, Van Wijnen lamented what he says are low cement prices in SA.
The industry’s profitability has come under pressure due to the slowdown in construction activity and an influx of imports. In addition, local manufacturers must now make provision for the carbon tax. These factors, says Van Wijnen, make it crucial for cement makers to charge prices that can support their profitability and long-term sustainability.
PPC named the Dutchman as CEO in June, but he had to wait for a work permit. He took up the position on October 1, replacing Johan Claassen, who took early retirement.
Van Wijnen worked for LafargeHolcim for 17 years. During his time there, Holcim Philippines implemented a new retail business model and a growth strategy to improve customer service and increase profitability.
That experience should stand him in good stead.
From an investment perspective, PPC has a solid asset base and a good footprint. It’s a "financially durable" company that has survived many cycles in its 127 years, he says.
But Van Wijnen says the industry needs urgent attention. Industry body the Concrete Institute has asked the department of trade & industry’s International Trade Administration Commission to apply tariffs on imports to protect the local industry. He has extended his support to the Concrete Institute.
But Van Wijnen will also have to make internal changes. He says people have told him that PPC is a complex company in a complex environment. "I do not buy that," he says. Cement companies have a limited range of products.
"My drive is to simplify how we do business. I always say: ‘Simplify, standardise and automate.’ We are a company that is in multiple jurisdictions but we have similar processes. We should leverage the fact that we are one PPC. I want people throughout the business to be performance-driven and to deliver on commitments that we make. Those commitments will be designed along three lines — economic value creation, environmental performance and social performance. They should be measurable."
Van Wijnen wants to sharpen PPC’s emphasis on performance. "I like to give responsibility to people who know what they are doing. With that responsibility comes accountability. That is the culture I want to create … one of openness and integrity."
What is in it for shareholders, who have watched PPC shares plummet by 80% over the past five years? By this week the PPC share price was down 43.39% since the beginning of 2019 alone.
He says the company is refining its strategic position, which includes assessing its portfolio to determine which assets are aligned with that strategy and what to do with those that aren’t.
But does simplifying the business entail restructuring?
"You can never exclude restructuring. But before the summer holidays here in SA, the PPC executive team will apply its mind on what constitutes group functions and what are SA support functions," Van Wijnen says.
"There has been a bit of a mix within PPC. That is explainable from where they come from. It’s an SA business that has grown internationally. Now we are an international business that requires some support at a group level looking after all our countries."
He says the company is developing measurable initiatives that it will take to stakeholders. "We will say to them: ‘This is what we are promising you in the next three years and we feel comfortable that we can achieve those.’ That is the process we have initiated. But it is going to take time to work through that and get back to the market with those commitments."