PPC – Still grinding away

PPC’s 1H23 results were underwhelming, largely due to high energy costs and hyperinflation accounting eroding profits. Its SA & Botswana operation produced positive revenue growth, albeit driven by price increases as volumes declined. It faced reduced retail sales inland, while coastal sales rose off the back of lower import volumes y-y.

The International cement division produced a weak result, marginally growing revenue. However, the poor performance came from Zimbabwe, which experienced lower sales volumes due to a scheduled (and unexpectedly prolonged) kiln shut-down for maintenance. It also faced increased pressure from imports, but increased economic activity in the region provides opportunity for strong growth in the future.

The SA Materials business produced positive revenue growth, driven by increased readymix volumes, benefitting from suppliers exiting the market. Aggregates volumes continued to fall due to low infrastructure investment and project awards outside the business’s economic areas of operation.

Assessing the impact that low-cost cement imports and increased competition have on PPC, we find that it is facing significant headwinds. Market share is being captured by new entrants and an import ban may not have the desired effect; however, in an infrastructure boom, PPC would be best placed to capture substantial demand.