PPC says efficiency drive cements sustainable turnaround as earnings surge

Tawanda Karombo

PPC chief executive Matias Cardarelli has said that the cement producer’s sharpened focus on operational efficiencies and cost containment has firmly set the group on a sustainable recovery path, after it delivered strong half-year earnings despite pressure from foreign exchange losses linked to its expansion programme.

Cardarelli told Business Report in an interview on Monday that PPC’s disciplined cost management strategy has allowed it to consistently keep expenses below inflation across all its operating regions. The group has operations in South Africa, Zimbabwe and Botswana.

“We continue bringing savings in overhead, and we are running our operations much more efficiently. We are producing more, more cement from our integrated plants,” he said.

Concurrently, PPC was continuing to invest in its assets, in the technology and in maintenance. It is building a new R3 billion cement plant in the Western Cape while it has just completed a plant performance improvement upgrade in Zimbabwe, helping it up production capacity

“By producing more you reduce indirectly your increases in costs and also your variable costs. Again, you reduce electricity consumption, you reduce thermal consumption. So I will say that its all about how efficiently you run your operations,” Cardarelli explained.

During the half-year period to the end of September, PPC lifted earnings before interest, tax, depreciation and amortisation (Ebitda) by 23.5% to R983 million. This was after revenues for the period quickened 6.2% to above R5bn.

Headline earnings per share (HEPS) adjusted for unrealised foreign exchange losses for the half year firmed up by 32% to 29 cents while net cash inflow before financing activities increased by 32% to R661m.

PPC attributed this to strong operational momentum although the HEPS performance had been impacted by non-cash unrealised foreign exchange losses on foreign exchange contracts taken out to hedge US dollar exposure on the construction of the new Western Cape plant.

Turnaround was accelerating for the SA cement operations, which raised revenues by 2.4% to R3.2bn, with Ebitda soaring 30.5% to R569m.

In Zimbabwe, strong volume growth resulted in revenue increasing by 23.4% to nearly R2bn. There was strong second quarter recovery after the extended planned plant shut-down of plant in the first quarter.

PPC Zimbabwe declared a $20 million dividend for the half-year after an 11% Ebitda increase to R446m.

“Building on last year's foundations, the plant performance improvement plan, additional distribution and logistics efficiencies and commercial opportunities to enhance contribution margin will continue to drive value creation and results growth,” the company said.

Group cost of sales for the interim period increased by 4.3% to R4.2bn, described by the company as a “lower rate of increase than revenue which, when combined with a 5,6% decrease in administration and other operating” expenses.

There was also a decrease in the provision for expected credit losses. All this translated to a significant 37% increase in trading profit to R688m, with capital expenditure during the period totalling R225m excluding the advance payment on the Western Cape plant.

The main contributor to the capex increase of R39m was constituted of maintenance expenditure in Zimbabwe of R110m due to the planned extended shutdown in the Colleen Bawn plant. This expenditure forms part of the three-year plant performance improvement plan.

This left group net cash at an improved R310m, which was, however, lower by R60m compared to a net cash position of R370m as at end March 2025.

BUSINESS REPORT