PPC has expressed optimism for financial 2025, citing impending tenders and an expected local infrastructure boom.
As it continues to trudge back to profitability by ramping up operational efficiency and competitive production costs, CEO Matias Cardarelli said the JSE-listed group was aiming for a 20% rise in production in the medium to long term as it looks to reclaim market share.
For the six months to end-September, the cement, aggregates, ready-mix and fly ash-maker on Monday reported revenue falling 4.2% to R5bn as cement sales dropped.
Down 0.6% at R3.5bn, the SA and Botswana segment contributed 70% to revenue. Price increases offset volume reductions.
In Zimbabwe, which accounted for 30% of revenue for the period, resumption of previously banned imports in October contributed negatively, resulting in an 11% drop in revenue.
PPC reported a 0.5% slip in earnings before interest, taxes, depreciation and amortisation (ebitda) to R796m from R800m in the prior matching period.
However, the group’s headline earnings per share (HEPS), a profit measure that excludes one-off items, leapt 10% to 22c from 20c. Free cash flow surged 36.2% to R500m, driven by cost discipline and price growth. Profit after tax rose to R318m from R269m before.
The group's core SA and Botswana operations returned to contributing positively to an expansion of the group’s ebitda margin, which rose 0.6% to 15.7%.
A special dividend of R521m was paid to shareholders during the period after competition authorities approved PPC’s sale of its shareholding in Rwanda.
Cardarelli said he was upbeat about the trajectory of the turnaround, which was already starting to illustrate gains, particularly in the second quarter.
He said that while the market remained relatively flat, PPC was buoyant about the future, with its ready-mix business starting to receive requests for new infrastructure for 2025.
“We are quite cautiously optimistic because our ready mix business is starting to receive requests for new infrastructure for next year, said the CEO. “And it looks like that some tenders are going to speed up.
“We are expecting infrastructure to come back, starting from next year,” he said. The group remained cautiously optimistic.
The 2024 medium-term budget policy statement (MTBPS) set a strong tone for SA’s effort to bolster infrastructure investments, while the positive sentiment about the government of national unity and falling interest rates have set the stage for an infrastructure boom in SA.
Groups like Raubex and Bidvest, alongside the travel and hospitality sector, have expressed excitement about the SA’s growth potential.
However, others have said that consumer behaviour and sentiment have not improved yet while logistical challenges at ports and railways remain.
Part of PPC’s turnaround plans have included a recalibration and upskilling of its workforce, changing its organisational culture and enhancing processes.
This resulted in a 15% drop in general expenses and higher free cash flow generation.
PPC Cement SA refinanced its primary borrowing facilities for the SA and Botswana group. Group CFO Brenda Berlin said this was to reset the tenure, get better pricing and restore a suitable repayment profile.
By raising production 20% and improving efficiency at its factories, PPC expects to regain its position as a premium cement maker and increase its market share in the next few years.
“By producing more we will be able to be in a better position to compete for market share with the current environment,” said Cardarelli. The group needed to regain market share lost over the years. “Awaken the giant is the call to action that will define our turnaround strategy.”
Meanwhile, the company’s strategic co-operation with leading cement-based building materials enterprise Sinoma Overseas Development Corporation will see it collaborate on opportunities to improve efficiency.
This includes modernising technologies, reducing production costs, accelerating transition to alternative nonfossil fuels and expanding capacity at PPC’s operations in SA, Botswana and Zimbabwe.
The CEO also cautioned against the rising incidence of inferior blended cement from local producers, saying this had a detrimental impact on public safety and negative implications for creating a competitive level playing field in SA.
PPC's share price was 0.73% lower at R4.09 at close of trader on Monday, but it has risen 20% over the past six months, giving it a R6.4bn market cap.
Update: November 18 2024
This story has been updated with new information throughout.
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