PPC delivered an exceptional set of results for FY26. While top-line growth was weak, profits and margins expanded significantly. PPC SA and Botswana surprised with improved profitability despite a muted SA market, suggesting that the turnaround strategy is bearing fruit. In Zimbabwe, improved production, a reduced clinker factor and strong demand and market growth drove both revenue and margin expansion.
While the “Awaken the Giant” strategy has paid off, there are still more gains to be made. PPC is expected to make further improvements in operational efficiency and reduce electricity and logistics costs. Thanks to the enhancements implemented with Sinoma, PPC has a blueprint for Zimbabwe and further gains are anticipated in that market. Planned solar plants, new logistics contracts and potentially a new integrated plant could also boost results. However, performance could take a hit in FY27 as the remaining capex for RK3 will be spent, and the group will not benefit from one-off gains from the sale of non-core assets.
The threat of cement imports persists. In SA, imports have risen to c. 20% of market demand, and in Zimbabwe, they now account for c. 50%. Despite the rapid rise in imports, we believe the Zimbabwean market is expanding quickly enough that imports are not a threat. In SA, they could still be an indirect threat to PPC, but positively, the industry is engaging with the SA government to protect local producers. Therefore, we believe that PPC is well-positioned for another strong year in FY27. While the SA market remains weak, any growth is likely to benefit PPC, and once RK3 is operational, there could be a step change in profits.