JSE-listed cement and construction materials company PPC notes in a trading update for the five-month period to August 31, that group earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 40% year-on-year while the group Ebitda margin strengthened by 6.2 percentage points year-on-year to 22.1%.

Group revenue also increased by 1%, with the positive revenue growth in Zimbabwe of 4% offsetting a 2% decline in South Africa and Botswana cement revenue, which reflects lower sales volumes partly recovered through improved price and product mix.

“Our performance continues to improve. While market conditions have become more challenging, we remain focused on positioning PPC to deliver sustainable value creation and an even stronger earnings trajectory,” says PPC CEO Matias Cardarelli.

The PPC Zimbabwe operations delivered an outstanding performance for the five months under review, while the group’s South African operations continue to prove that value creation, not volume at any cost, is the winning strategy.

“In an environment of weaker demand, rising diesel costs and inflationary pressures, we have expanded margins through pricing discipline, product mix enhancement and operational efficiency improvement,” Cardarelli says.

In the financial year to end on March 31, 2027, PPC is set to ensure the substantial gains delivered in its 2025 and 2026 financial years are consolidated, while the group completes the construction of its new integrated cement plant, RK3, in the Western Cape.

With RK3 and the next phase of its Awaken the Giant turnaround strategy, the group is positioning itself for a meaningful acceleration in growth, profitability and value creation, and supporting a further step change in performance from its 2028 financial year onwards, he says.

The group’s South African and Botswana operations reported 8% lower cement sales volumes than the comparable five-month period of the 2026 financial year, while revenue declined by 2%, which is a materially smaller decline than the reduction in volumes. This reflects the positive impact of the sales mix and pricing adjustments, including the diesel cost surcharge, the group points out.

Importantly, Ebitda for the South African and Botswana operations, including group services, grew by 3.3% over the five-month period under review and the Ebitda margin expanded by 0.4 of a percentage point to 17.9%, which highlights PPC’s ability to continue driving earnings growth and margin improvement even in an inflationary, low demand environment.

“Against a backdrop of weak demand, certain producers pursued volume growth through aggressive price discounting. This behaviour is self-destructive because it does not create additional demand for cement nor sustained market share, as it destroys value and undermines profitability,” says Cardarelli.

PPC continues to protect value and preserve sustainability, maintain the commercial discipline established under its turnaround strategy and prioritise value accretive sales and margin growth.

While not in line with PPC's strategy, the group’s superior asset base, technological advantages, footprint and strong balance sheet, make it well-positioned to respond to price, should it be required, he adds.

Further, the group’s Zimbabwe operations increased cement sales volumes by 3% year-on-year, supported by robust demand across the industrial and retail sectors.

The plant performance improvement plan continues to deliver tangible results. Higher own-clinker production is translating directly into improved profitability, while the Colleen Bawn kiln achieved world-class operating performance during the first quarter of the current 2027 financial year.

The PPC Zimbabwe operations delivered another strong performance, with Ebitda margin expanding to 34.2% from 19.1% in the prior comparable period. While the prior period was impacted on by an extended planned maintenance shutdown at Colleen Bawn, the current results also reflect the structural benefits of improved plant reliability, higher clinker self-sufficiency and disciplined operational execution.

The planned maintenance shutdown is currently under way and will moderate the margins to be reported for the first half of the group’s 2027 financial year.

The profitability of PPC’s Zimbabwe operations is expected to remain materially ahead of the prior year, which underscores the significant progress achieved through the turnaround and the strength of the Zimbabwe business.

Ebitda reported by the Zimbabwe operations at the half-year will be moderated by the planned Colleen Bawn plant shutdown, while the compounding impact of improved margins with cement volume growth are expected to continue to benefit the results in the second half of the year.

PPC notes that progress continues to be made on the proposed development of a new integrated plant in Zimbabwe, including ongoing engagement with Sinoma on the engineering, procurement and construction contract, mine prospecting activities and the assessment of acceptable financing alternatives.

Meanwhile, in terms of its outlook for the remainder of the financial year, PPC says it continues to demonstrate high-quality earnings, supported by structural operational improvements, disciplined commercial execution and a clear focus on value creation and growing shareholder returns.

“PPC does not anticipate a near-term improvement in the South African cement trading conditions, while some competitors continue irrationally discounting cement prices, even while elevated diesel prices continue to pressure both distribution and production costs.

“PPC will remain disciplined and focused on what it can control, namely competing on quality, service reliability and continuing to strengthen operational performance,” Cardarelli adds.

“The current 2027 financial year is a year of consolidation of the improvements achieved in the 2025 and 2026 financial years, with the next meaningful step change in financial performance anticipated in the 2028 financial year following the commissioning of RK3, which we are eagerly anticipating.”

Additionally, the current anti-dumping application before the International Trade Administration Commission of South Africa, related to cement imports from Mozambique and Vietnam, has progressed and a favourable outcome would represent an important step towards restoring fair competition in the market.

Creating a level playing field between local producers and importers is essential to supporting continued investment, employment and industrial capacity in South Africa, he says.

“The continued growth of dumped imports, particularly from Mozambique, is undermining fair competition and placing South African jobs, investment and industrial capacity at risk. While local producers invest in environmental compliance, labour standards and community development, imported cement is not subject to the same obligations.

“The urgent implementation of antidumping measures and carbon border mechanisms is critical to restoring fair market conditions and preventing the further transfer of economic activity, employment opportunities and industrial value outside South Africa,” he says.

PPC expects to release its results for the six months to end on September 30 on or about November 16.