Key message: A remarkable operational turnaround continues to boost EBITDA margins despite a weak cement market.
- PPC released a Trading Update for the four months to July 2025.
- Key takeaways from the update: PPC has continued to improve its margins despite the weak cement market. The steady increase in margins has been impressive a market where price increases are continually eroded by competitive pressure and overall volume growth still appears to be negative.
- In South Africa and Botswana, volumes increased by 2% which we believe indicates market share growth (although clinker was exported to Zimbabwe with Colleen Bawn down for maintenance). The EBITDA margin increased to 17.7% (from 10.3%) and is expected to be at approx. 17% for the six-month period.
- Volumes in Zimbabwe increased by 22% with strong consumer demand and the imposition of import tariffs of 30%. Good cash extraction continues with US$20m extracted in 1H FY26. The sale of vacant land in Zimbabwe will realise a further US$30m – this could possibly be paid as a special dividend in line with the policy of paying all cash from Zimbabwe to shareholders.
- The new RK3 project in the Western Cape remains on track.
- On the back of this update we increase for earnings forecast for FY26 to 63c (from 55c). We consequently increase our Target Price to R5.90 (from R5.60).