Shares in cement maker PPC rose on Monday after the group said it had seen a marked improvement in its results despite the weak SA macroeconomic environment.
Shortly after 2pm on the JSE PPC’s shares were up 3.8% at R5.17.
The group, which is entering the second year of its strategic turnaround, said on Monday that group earnings before interest, tax, depreciation and amortisation (ebitda) increased more than 20% in the four months ended July compared with a year ago, and ebitda margin grew more than two percentage points to 15.9%.
Group revenue for the four months to end-July increased 4%, driven by growth in cement sales in SA, Botswana and Zimbabwe.
In the SA and Botswana cement segment, sales volumes increased 2% from a year ago due to stronger retail sales and sales of clinker to PPC Zimbabwe.
In SA, ebitda over the past four months delivered a notable improvement, with the ebitda margin increasing materially to 17.7% from 10.3% in the comparable period.
“The SA economic environment remains challenging, with low levels of infrastructure development. Even in this context, sales volumes increased by 2% relative to the comparable period due to stronger retail sales and higher sales of clinker to PPC Zimbabwe,” it said.
The timing of certain plant shutdowns contributed positively in the current period. As this normalises in the six months ending September, the SA and Botswana cement margin is expected to remain at about 17%.
Cement sales volumes in Zimbabwe increased 22%, largely as a result of strong consumer demand and the positive impact of a 30% tariff on imported cement in May.
During the first two months of the current period, PPC Zimbabwe implemented an extended shutdown of its Colleen Bawn plant. This was part of the three-year plant performance improvement plan aimed at better positioning PPC Zimbabwe to produce higher volumes of own-clinker for the production of cement to meet growing demand.
The costs of the extended shutdown, combined with the higher consumption of imported clinker, affected ebitda and its ebitda margin in the first three months of the period. PPC Zimbabwe’s ebitda margin shrank to 15.3% from 29% in the comparable period. After the extended shutdown, the monthly ebitda margin returned to the level achieved in the comparable period, PPC said.
Cash generation remained strong, notwithstanding the temporarily lower ebitda margins.
The sale of the Arlington property for $30m announced in August, remains on track but has not yet been accounted for.
Overall group ebitda continued to increase over the comparable period, and the ebitda margin reached 15.9% from 13.7%.
“As margins increase considerably in Zimbabwe and reduce marginally in SA over August and September, group ebitda margins are expected to continue to increase from the current period level,” PPC said.
The operational cash generation by the SA and Botswana group, before financing activities and capital expenditure on the new integrated cement plant in the Western Cape (RK3 project) and excluding dividends received from PPC Zimbabwe, is expected to remain positive.
Of the $20m dividend declared by Zimbabwe, $12m had been received and the remaining $8m was expected in October. During the current period, an ordinary dividend totalling R274m for the 2025 financial year was declared and paid, in line with the company’s continued commitment to its dividend policy.
“The PPC group continues to successfully deliver on its ‘Awaken the Giant’ strategic turnaround. This strategy is focused on increasing long-term leadership and competitiveness through increased profitability and cash flow,” it said.
“As we enter the second year of our strategic turnaround plan, I am very pleased that we are making consistent progress. It is resulting in further growth and margin expansion. This is on top of what was achieved in the 2025 financial year, which also delivered marked improvements across all key metrics,” said CEO Matias Cardarelli.
PPC said the positive effects of improved operational efficiency and the right commercial focus, in line with the turnaround strategy, would enable it to continue to compete effectively in the market while delivering returns to shareholders.
Efforts would remain concentrated on leveraging the group’s quality assets and footprint, as well as continuing to increase margins.
The RK3 project remains on track and gearing projections remain unchanged. The board approved the capital expenditure of R3bn for the construction of the new integrated plant in the Western Cape earlier in 2025. With a capacity of 1.5-million tonnes of cement a year, the plant will replace and increase the capacity of the existing Riebeeck and De Hoek plants in the province — both of which are more than 40 years old.
Construction of the new plant, first announced in January, started in the second quarter. It will be commissioned by the end of 2026.
“We remain very focused on the execution of the turnaround strategy. We know what needs to be done, and we are focused on doing it. Our priorities are clear, our strategy is well defined, and our actions remain aligned with delivering solid results,” said Cardarelli.
PPC expects to release its interim results on November 24.
Update: September 22 2024
This version was updated to include the share price movement and to clarify information about the ebitda margins.
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