Though demand for cement is below pre-Covid levels nationally and government promises about infrastructure renewal are largely unfulfilled, cement group Sephaku Holdings is forging ahead with expansion in the Western Cape.
The R49bn cement industry — a reliable barometer of the economy, business confidence and the local infrastructure agenda — has been stuck in the doldrums. Its post-Covid rebound has been glacial, putting growth plans in limbo for several cement makers.
Brittle investor sentiment is apparent in Sephaku’s share price, which has fluctuated between 138c and 157c this year, reflecting a modest market value of R351m.
The group’s cement division, SepCem, tells a story of financial and market pressures. For the year ended December 2024, year-on-year revenue dipped 1% to R2.78bn.
Sales volumes fell 4% to 92Mt after a 9% increase the year before, as demand sagged. Overall sales volumes remain below pre-Covid levels — in December 2020 the figure was 100Mt.
At Sephaku’s annual results presentation in July, for the year to end-March 2025, CEO Kenneth Capes painted a concerning picture, noting that the economy is expected to grow only 0.5% in 2025. While inflation is projected to decline and minor interest rate cuts are expected, these factors are unlikely to stimulate significant growth in the construction sector.
SepCem’s revenue fell 12% to R526m in its first quarter ending March 2025, well short of the R596m forecast. Sales volumes also declined year on year.
Capes doesn’t expect a turnaround in the industry any time soon.
More than a year after the GNU was formed, consumer and business confidence seem to have faded, he said.
Even the recent two-pot withdrawals, which provided households with a windfall, did not benefit all retail categories. Consumers largely used the money to settle debts rather than buy such discretionary items as building materials. “This has yet to translate into any meaningful uplift in the hardware retail sector, which continues to reflect muted demand — mirroring trends in the cement market,” said Capes.
The cement industry has expressed concern at the decline in infrastructure projects, which Capes said had been a feature of the past four quarters. This was despite the GNU’s declared aim of implementing such projects to stimulate economic growth and investment.
President Cyril Ramaphosa has repeated promises of new infrastructure projects every year since 2018, with little tangible result. The government has struggled to get projects off the ground, due mainly to a lack of engineers and project managers in local government and provincial administrations.
This means South Africa has few, if any, new infrastructure projects to showcase to private sector investors who might want to partner with the government.
Underscoring the neglect of infrastructure is that while the national development plan calls for gross fixed capital formation — a measure of investment — to equal 30% of GDP, it is languishing at about 16%.
Capes does not expect a major rollout of infrastructure projects in the near term, a view echoed by rival PPC.
PPC CEO Matias Cardarelli hopes the government will “walk the talk” this time. “We are looking at the new infrastructure plan that the GNU emphasised is coming. We are cautiously optimistic,” he tells the FM.
Ramaphosa has repeated promises of new infrastructure projects every year since 2018, with little tangible result
Despite these pressures, PPC and Sephaku continue to expand their cement-making capacity in the Western Cape, where Capes said the construction sector was in better shape than the rest of the country.
PPC plans to spend R3bn to build a new plant at its existing site in the Western Cape and Sephaku subsidiary Métier — which makes ready-mixed concrete products — is expanding its plant network in the province.
It is a big undertaking by Métier at a time when South Africa is experiencing an oversupply of cement. Cheap imports from China, Pakistan and Vietnam are undercutting local players.
But Capes said infrastructure development is strong in the Western Cape, creating demand that justifies Métier’s expansion.
While the government dithers on infrastructure, the private sector is still spending, particularly on energy projects.
According to Nedbank, new infrastructure projects announced during the first half of 2025 were valued at R316.2bn, less than half the R592.2bn recorded for the same period last year.
Notably, none of the projects announced this year were government or public corporation initiatives — all were by the private sector, Nedbank said in its H1 2025 Capital Expenditure Project Listing report. Many of the projects were in the Western Cape. Capes said Métier was girding itself to supply cement for them.
Sephaku has been cleaning up its balance sheet and reducing debt. It completed the second year of a three-year loan repayment plan, with the balance due at end-October 2025.
At group level, borrowings for the year to end-March 2025 rose to R124m from R65m the previous year, primarily to fund the plant renewal programme and the purchase of new property.
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