PPC sees earnings surge amid strategic shifts and market challenges

Tawanda Karombo

PPC CEO, Matias Cardarelli, said on Monday that the cement manufacturer has worked hard to control underperformance within the group, unlock internal revenue and putting in place measures to enhance efficiencies, helping the company to a full-year earnings surge.

This comes as headline earnings per share in PPC for the year to end March 2025 grew from 19 cents a year ago to 40 cents. This was despite a decrease of 1.9% in revenues to R9.88 billion for the same period.

Earnings before interest, tax, depreciation and amortisation surged 28% to R1.59bn with operational free cash flow increasing to R1bn, helping the company to grow ordinary dividends for the period to 17.6 cents compared to 13.7 cents per share in the previous comparative period.

Cardarelli said PPC has had to focus on internal corrections to grow its earnings and unlock under utilised value for the company. He explained that the company had performed “ahead” of what it was expecting for the period under review.

“When we came here at PPC, there was an a narrative that the only problems that PPC was having were the problems connected to the economy, and the cement sector in South Africa was not growing for more than 10 years. Whereas that was not completely the case, that was a negative impact for the company,” Cardarelli told Business Report in an interview on Monday.

PPC is building a new plant in the Western Cape provice and will have a new solar power plant set up in Zimbabwe as it invests further into the company at a time the costs of electricity and other inputs are spiking.

The company though said that imports of cement into its regional markets were not a major worry as it was bumping up its competitiveness against rival local and imported products.

“On South Africa, we remain cautiously optimistic for the announcement of the new GNU government of a big infrastructure plans,” Cardarelli added.

Although for PPC the South African market was still facing challenges from a demand side perspective, the company was focusing on changing its business fundamentals and approaches to doing business.

PPC’s "Awakening the Giant" strategic turnaround plan had started to yield results, helping to ensure that the company “recovers competitiveness, rebuilds profitability and becomes a sustainable” leader. 

During the period under review, PPC offset inflationary costs with early operational improvements, from logistics optimisation to better product mixes, lower clinker factor and improved sales sourcing.

The company was continuing to evaluate projects and strategic options that will support medium- to long-term value creation, including the signing of an engineer, procure and construct (EPC) contract in March 2025 with Sinoma Overseas Development Company for the construction of a new 1.5 million tons a year, R3bn, state-of-the-art integrated cement plant in the Western Cape. 

The new plant will replace and increase existing capacity.   

“The real benefits of this project are expected to start materialising in FY28, and will secure PPC’s competitive position in the market as a result of innovative energy efficiency, reduced coal consumption and lower emissions per ton of cement,” explained Cardarelli.

He said though that this was coming against the backdrop of international cement groups entering the market with a strong investment in new technology, bringing cost efficiency.

While PPC is “cautiously optimistic about the planned infrastructure spend recovery,” it believes that “long-term sustainability does not rely on an improved overall economic” environment.

“The focus continues to be on unlocking internal value, as demonstrated in the FY25 results, without requiring any significant market shift,” Cardarelli said.

BUSINESS REPORT