PPC Cement bags on conveyor at PPC De Hoek Western Cape. Picture: Supplied
PPC has begun to see benefits materialise from its turnaround programme in its second quarter, said CEO Matias Cardarelli yesterday.
Africa’s biggest cementitious product producer yesterday reported an increase in headline earnings per share to 22 cents for the six months to September 30, up from 20 cents at the same time a year before.
Revenue fell 4.2% to R5.07 billion. Earnings before interest, tax, depreciation, and amortisation (EBITDA) was marginally lower at R796 million.
“PPC's half-year results closed with a strong second quarter, rebuilding off a weaker first quarter. We have early positive and encouraging signs in all lines of our business,” Cardarelli said in a statement.
Following the approval of competition authorities of PPC’s sale of its investment in Rwanda, a special dividend of R521m was paid during the period.
Net debt fell to R203m from R488m, but increased over the R78m cash position at March 31, 2024. The main drivers of the net debt were a dividend paid of R703m, cash generated from operations of R500m, and a negative R52m exchange difference on cash balances.
The turnaround process involved a recalibration and upskilling of people, organisational culture, and processes.
“The challenging heritage and extent of the changes required are pervasive, but we have built a high-calibre team to drive the turnaround. We have made key changes in our structure, recruiting highly skilled and experienced talent that has strengthened our commercial, logistics, IT, and industrial teams,” he said.
An industrial performance programme has been launched with targets for all equipment from the quarry to dispatch, instilling cost centre ownership and eliminating unnecessary expenses.
“As we gain access to reliable management information, the market approach will follow, optimising sourcing, product offerings, and a footprint that will benefit our customers,” he said.
The South African and Botswana business’ recovery benefited from cost discipline and price growth, despite the lower sales volumes.
PPC Zimbabwe’s lower sales reflected a return to a normal market after import restrictions were lifted in October 2023. The impact of normalised volumes was offset by cost-saving initiatives reflecting in margin growth.
There was strong cash flow generation during the interim period, and group net cash inflow before financing activities increased by 36.2% to R500m.
The SA and Botswana business revenue fell 0.6% to R3.53bn, but EBITDA was up 5.9% to R394m. Net cash inflow before financing activities increased to R303m from R199m.
PPC Zimbabwe’s revenue fell 11.6% to R1.54bn, and EBITDA was down 6.3% to R402m. Net cash inflow before financing activities fell to R202m from R208m. A dividend of $4m was declared and paid after the half-year.
PPC Zimbabwe's revenue decreased by 11.6% due to the resumption of imports, and materials revenue reduced by 9.5% due to lower revenues in the readymix business.
Group cost of sales decreased by 5.1% to R4.1bn, which was a higher rate of decrease than revenue, which, when combined with 6.9% lower administration and other operating expenses, resulted in a 7.5% increase in trading profit to R502m.
No impairments were required compared to the impairment of R53m in the prior period relating to the mothballing by PPC Cement SA of its Jupiter milling plant.
South Africa and Botswana cement sales were down 5.8% when compared to the prior period, due to a decline in retail or bagged cement sales as bulk cement sales increased.
“While retail demand is relatively flat period-on-period, aggressive pricing from some competitors drove the lower sales volumes. The benefit of the positive sentiment following the elections earlier this year is still not reflected in the construction market,” he said.
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