One of South Africa’s oldest companies soars as turnaround takes shape

PPC’s share price is up as much as 10.5% following an operational update that saw the cement manufacturer’s turnaround start to bear fruit.

PPC is one of South Africa’s oldest companies, having been incorporated in 1892 as the first cement manufacturer in South Africa.

The company has since grown its reach across sub-Saharan Africa and its capacity has grown to around eleven and a half million tonnes of cement products each year.

PPC cement was famously used to build the Union Buildings from 1909 to 1913, the first concrete structure at Loftus Versfeld, and the modern Cape Town City Stadium.

While the cement producer is still a giant in its industry, it has taken several hits over the past few years.

Sluggish economic growth, cheap cement imports into South Africa, and the country’s struggling manufacturing industry have significantly impacted the company’s performance.

Between 2019 and 2023, the company experienced fluctuations in revenue and profitability, with a notable decline in 2021.

Therefore, the company embarked on a turnaround strategy, which has started to bear fruit.

PPC released an operational update on Monday, 3 March 2025, detailing the progress it has made on its “transformative journey” so far.

It said this journey is aimed at repositioning the group for sustainable profitability and long-term growth.

“The Awaken the Giant turnaround plan was developed to execute on the opportunities identified to improve the performance of the group while scoping strategic opportunities,” the company said. 

The first key steps PPC has implemented so far include key strategic personnel changes, the simplification of its previously complex organisational structure, and the realignment of its organisational culture to ensure the appropriate results-orientated focus, cost discipline and a sense of urgency.

The first sign of recovery for PPC came in its half-year performance reported on 18 November 2024.

The company said this has continued into the second half of the financial year as the plan gains momentum. 

“In the key areas of commercial, operations and supply chain, the initiatives under implementation are already showing results,” it said.

This includes plant sourcing optimisation, sales product mix enhancement, improved thermal energy costs and logistics management. 

These factors led to an improvement in PPC’s EBITDA, which grew by 20% in the ten months through January 2025. The company’s EBITDA margin also improved by 3.2 percentage points to 16.6%.

“The increase in both absolute EBITDA and EBITDA margins is due to all business units improving their results mainly as a consequence of the turnaround plan,” it said.

However, PPC noted that its revenue decreased over this ten-month period, reporting a decline of 3%.

The company attributed this decline to a decrease in the revenue in PPC’s Zimbabwe operations while its South Africa and Botswana group delivered a flat performance.

It added that capital expenditure for the group is expected to come in slightly below the guidance of R400 million to R450 million for the full financial year. 

“Some optimisation capital expenditure is being re-assessed while maintenance expenditure was as planned,” it said.

Positively, PPC noted that, as the stringent focus on costs and working capital took effect, its South Africa and Botswana group’s free cashflow increased by a substantial 90% to R692 million. 

On 31 January 2025, the South Africa and Botswana group was in a net cash position of R106 million. 

It added that PPC Zimbabwe continues to remain debt-free and held US$13 million (R242.65 million) in unencumbered cash on 31 January 2025.

PPC Zimbabwe also increased its free cashflow generation, leading to an increase in total dividends declared and paid of $13 million (R242.65 million) year-to-date.

Looking forward, PPC provided an update on the development of a “best-in-class” integrated cement plant in the Western Cape.

The company said this project is in the final stage ahead of seeking board approval.

This project is expected to secure PPC’s cost competitiveness and low-carbon cement leadership.

PPC said the plant will be built on a turnkey engineer, procure and construct contract, which will significantly de-risk any capital overruns. 

It explained that the material reduction in variable costs due to technology and fixed costs due to only operating on one site makes the plant value accretive without relying on market growth.

“While the significant operational improvements are still gaining momentum, the improvement of the results in the current period already reflects early delivery of the turnaround plan, ahead of the previously advised timeline,” it said.

“Following the strong cash generation in the current period, resulting in record dividends from PPC Zimbabwe and the healthy cashflow generation in South Africa, the board will consider a dividend in terms of its distribution policy.”