PPC’s Turnaround Pays Off

PPC, the JSE-listed cement producer founded 134 years ago, delivered its strongest set of annual results in recent memory on Monday, as the second year of its “Awaken the Giant” turnaround strategy produced a 31% jump in group EBITDA and pushed cumulative earnings growth to 62% over two years.

PPC Group — key metrics, year ended 31 March 2026

Sources: PPC FY2026 annual results; CemNet; Daily Investor; Moneyweb; African News Agency

For the year ended 31 March 2026, the group reported EBITDA of R2.08 billion, with the EBITDA margin expanding to 20.3% from 16.1% a year earlier. Earnings per share increased 75% to 56 cents, and the board declared an ordinary dividend of 30.2 cents per share — a 72% increase from 17.6 cents the prior year. The dividend, the first substantial ordinary payout after years of balance sheet repair, is perhaps the clearest signal yet that the turnaround is holding.

READ – Zimbabwe Propels PPC’s Path to Profitability

The two-year arc of the “Awaken the Giant” strategy has been significant. EBITDA has grown 62% from R1.2 billion in 2024 to R2.1 billion in 2026, while the EBITDA margin has expanded by eight percentage points over the same period. CEO Matias Cardarelli described the results as materially ahead of management’s own expectations, noting that benchmarking PPC’s assets against comparable operations globally suggests the company’s recovery still has room to run.

The domestic performance, while not dramatic in volume terms, was driven entirely by cost discipline rather than demand. Cement sales volumes in South Africa and Botswana, including clinker exports to Zimbabwe, grew just 1.3% for the year. In South Africa, overall volumes were stable, with growth in the industrial and construction segments offset by softer retail demand where competitive pressure remained elevated. The gains were made on the cost side. Revenue from contracts with customers grew 3.89%, while cost of sales increased by just 1.80% to R8.07 billion — a controlled divergence that directly widened margins. SA and Botswana EBITDA surged 43% to R1.2 billion, with the margin improving 5.5 percentage points to 19.1%.

Post-period, Cardarelli indicated that South African volumes have remained muted. The broader domestic construction market continues to operate well below the levels that would justify capacity expansion through demand alone, which is precisely why PPC’s cost-focused strategy — prioritising value-accretive sales over volume at any price — has been commercially effective in the current environment. The South African cement market remains intensely competitive, with both PPC and AfriSam operating in a market that has been structurally oversupplied relative to demand for several years.

Zimbabwe was the standout growth contributor. PPC Zimbabwe reported an 18.2% increase in cement sales volumes and a 14.3% rise in revenue to R3.57 billion. EBITDA reached a record R961 million, supported by healthy construction demand and improved clinker production. The Zimbabwean operations’ second-half EBITDA margin recovered to 30.9% after a softer first half, ending the year with Zimbabwe now accounting for a disproportionately large share of the group’s earnings power relative to its revenue contribution. For a company headquartered in South Africa, the degree to which a Zimbabwean operation has become a core earnings driver is a notable structural feature of the current results profile.

The group’s net cash inflow before financing activities, adjusted for the new RK3 cement plant under construction in the Western Cape, increased 23% to R1.29 billion — up significantly from R260 million in 2024. The cash generation improvement is directly funding PPC’s most significant capital commitment in years.

The RK3 project is a R3.1 billion integrated cement plant at PPC’s existing Riebeeck site in the Western Cape, being built under a $134 million engineering, procurement, and construction contract with Sinoma, the world’s largest cement equipment manufacturer. The plant will have a production capacity of 1.5 million tonnes annually and will be powered partly by a solar generation system. It is expected to come on stream in the first quarter of FY2027, with earnings contributions anticipated from FY2028 — the “next step-change” Cardarelli has flagged in multiple communications to shareholders.

The timing of these results has added commercial significance beyond the earnings themselves. In May, Bloomberg reported that Heidelberg Materials, the German cement giant, was in talks with banks to appoint financial advisers as it considered a bid for PPC. Heidelberg, which has been expanding aggressively in emerging markets and currently has only a small grinding plant in South Africa’s Eastern Cape, has identified Africa as a region with structural growth potential. The group has been on an acquisition run in 2026, snapping up the construction business of Australia’s Maas Group and increasing its stake in Turkish cement producer Akçansa to 79.44%. A PPC acquisition would immediately establish Heidelberg as a dominant player in both South Africa and Zimbabwe. AirguideSouth African Airways

PPC has not publicly responded to the Heidelberg interest, and any transaction would require regulatory approval across multiple jurisdictions. What the FY2026 results have done, however, is confirm that PPC is now a more valuable business than it was 24 months ago — and that the turnaround Cardarelli has executed has not only restored profitability but has also, in all likelihood, raised the price of any potential acquirer’s ambitions.

The group is also exploring the possibility of a new cement plant in Zimbabwe, though no capital commitment has yet been made. Cardarelli has said he believes PPC’s assets, when benchmarked against comparable operations internationally, indicate that further value can still be unlocked — though South African demand volumes remain the primary uncertainty in the near-term outlook. With the RK3 plant scheduled to add 1.5 million tonnes of Western Cape capacity in 2027, and Zimbabwe continuing to absorb demand from a growing construction sector, the medium-term growth thesis for PPC is increasingly legible — even if the South African macro environment remains the variable most difficult to predict.