JOHANNESBURG – South African cement maker PPC said on Monday its chief executive officer Darryll Castle will step down immediately to pursue other interests, sending its share price down more than 7%.
Castle’s resignation follows the departure of independent non-executive director Tito Mboweni, former Reserve Bank governor, who resigned on July 18 with no explanation.
Castle has been at the helm for nearly three years at PPC, which is in the midst of negotiating a possible merger with its nearest rival Afrisam.
PPC reported a 93% plunge in annual earnings last month due to a liquidity crisis after Standard & Poor’s cut its credit rating to junk status last year, but its outlook has been improving.
“This is unexpected and disappointing. Darryll Castle seemed to have steadied the company and the timing of this raises questions given the recent resignation of Tito Mboweni as well,” Afrifocus Securities equity analyst Tinashe Kambadza said.
“There have clearly been disagreements either with the company’s strategy in Africa or over the Afrisam deal, which raises more questions going forward.”
Castle will resign with immediate effect but will be available to the group for six months to ensure a smooth handover, PPC said in a statement.
Johan Claassen, managing director of the South African cement business, has been appointed interim chief executive.
“Mr Castle joined the board at a difficult time and was instrumental in stabilising the company and overseeing the commissioning of several new projects for which the board is most grateful,” PPC said.
When Castle joined the company in 2015 he ended a three-month leadership vacuum that had undermined investor confidence in the firm after CEO Ketso Gordhan abruptly resigned in 2014 following clashes with the board.
Under Castle, PPC has pushed deeper into the rest of Africa as profits slumped in its domestic market. The commissioning of a Zimbabwe mill and projects in Ethiopia and Democratic Republic of Congo increased its cement capacity by 33% to 11.4 million tonnes per annum, but such projects also added to the company’s debt burden.
Shares in PPC hit their lowest level in more than a year on news of Castle’s resignation, skidding 7.7% to R4.51 by 1032 GMT.