PPC Ltd (PPC), the leading supplier of cement and related products in southern Africa, has announced its financial results for the half-year ended 30 September 2024. CEO Matias Cardarelli says the half-year financial results have started to reflect the turnaround changes implemented, showing a marked improvement in the second quarter following a challenging first quarter.
“We are witnessing early positive indicators across all segments of our business as we implement key turnaround actions. Awaken the Giant is the call to action that defines our turnaround strategy. While we recognise that this journey will take time, my confidence in the size of the turnaround reward is growing,” says Cardarelli.
The turnaround in progress involves a thorough recalibration and upskilling of the workforce, changing the organisational culture and enhancing processes. This comprehensive approach will improve operational efficiency, asset optimisation and topline growth. While the challenges are significant, Cardarelli says the company is fortunate to have a skilled and experienced leadership team driving this process.
“Critical structural changes have had to be made, including the recruitment of skilled and experienced professionals that complemented PPC’s existing talent. Additionally, we have introduced a plant performance improvement programme with specific targets for all the production phases, spanning quarrying to dispatch,” he says.
“The initiatives related to cost centre accountability and elimination of unnecessary expenditure were quick to impact our results, reflecting a 15% reduction in overhead costs in the South Africa and Botswana group. As we now have access to reliable management information, we are starting to optimise our market strategy, sourcing, channels and footprint to better serve our customers.”
Brenda Berlin, chief financial officer of PPC, comments on the financial results. “We are particularly encouraged by the early signs of the benefit of cost discipline. This resulted in a 0,6% points improvement in Group EBITDA margins to 15,7% notwithstanding a 4,2% reduction in revenues to R5,067-million.”
She also highlights the significant increase in net cash generation before financing activities, which rose by 36,2% to R500-million, mainly due to improved working capital management. In a flat cement market, the SA and Botswana group achieved an EBITDA of R394-million, representing a 6,2% increase on the previous period. This was offset by a decrease of 6,3% in EBITDA from Zimbabwe which totalled R402-million in the current period.”
As Berlin reminds, “The second half of the financial year always tends to be slower due to seasonal factors and this will put pressure on margins. Our focus on cost savings will help mitigate the impact of this cycle as well as ongoing inflationary pressures.”
Looking ahead, Cardarelli states that PPC will remain focused on its turnaround strategy to unlock internal value and better position the company for when the market improves. This involves improving operational efficiency at its plants and in logistics.
“Our commercial growth plans aim to strengthen our market presence by aligning PPC with the right channels and delivering clear value to our customers. We will maintain a disciplined approach to managing costs while promoting a culture of urgency, ownership and accountability within our organisation,” he says.
“The PPC board and I are fully aligned to restore PPC as a leader in profitability and better position it for further strategic opportunities. While we recognise the complexities ahead, the opportunities in front of us far surpass the risks. We are increasingly confident in the significant rewards that this turnaround can yield. We are focused on growth. ‘Awaken the Giant’ is the path forward.”
