PPC CEO Matias Cardarelli says there is “more to come” from the cement producer’s operational and financial turnaround regardless of whether market conditions, which have remained subdued during the first two years of the group’s recovery, improve on the back of promised infrastructure spending.

The company announced a strong performance for the ten months to January 31 during its Capital Markets Day on March 18, with the highlight being the rise in its earnings before interest, taxes, depreciation and amortisation (Ebitda) margin to 19.4%.

PPC’s margin stood at 16.6% in the comparable period last year, and was at 12% when the turnaround was initiated.

The group’s Ebitda was 22% higher period- on-period, while revenue increased by 4%, mostly driven by the increase in PPC’s Zimbabwe operations, while revenue from South Africa and Botswana remained largely unchanged.

Cardarelli said that internal rather than external factors had underpinned its recent earnings and margin recovery and that cost and price discipline would remain priorities for the coming three financial years, with any possible recovery in the construction market regarded as an additional advantage.

PPC’s 2027 financial year is expected to be a year of consolidation ahead of another “step change” in 2028, when its modern R3-billion RK3 investment at its Riebeeck plant, in the Western Cape, will start fully contributing.

By that date, its Ebitda margin was targeted to be above 21% and the group’s installed clinker capacity would have been renewed, which Cardarelli viewed as a key competitive advantage in a market where many other clinker assets were considered to be old.

“Technology upgrade is no longer optional . . . businesses that under-invest are at risk, while the ones that are investing are the ones who will remain as the main players in the sector in the years to come,” he said in a presentation to investors.

The relative age of the fleet and its proximity to key areas of demand would also enable PPC to respond to any possible infrastructure market growth, with government having indicated that it intended shifting the composition of spending towards infrastructure, while also crowding in private capital.

PPC said a 6% increase in clinker production was possible simply by implementing its plant performance improvement plan, which had already spurred a 10% year-on-year rise in output.

Through the group’s ‘Awaken the Giant’ strategy, various other structural, cultural and personnel changes had been implemented, alongside major changes to logistics and procurement.

There had been a particularly keen focus on margin over volume, with Cardarelli describing “chasing market share by irresponsibly dropping prices” as value-destructive and overly reliant on favourable market dynamics to ensure sustainability.

“We follow the exact opposite strategy, with a contribution-margin focus. The external challenges are still there; they remain unchanged, [but] ...our strategy is designed to create value despite these headwinds, not to wait for them to disappear or to change.”

He also expressed optimism about the prospects for an ongoing strong contribution from PPC Zimbabwe, which delivered a substantial increase in total dividends declared and paid out $36-million, or R595-million, in the current period, up from $8-million (R142-million) in the comparable period.

“There is more to come, and our confidence is grounded in fundamentals, not optimism,” Cardarelli told investors.