As at 7 July 2025

Executive Summary

In this report, we will look at the full year 2025 results:

·        South Africa and Botswana:

o   The market continues to be imbalanced as supply is greater than demand. The company implements bi-annual price increases to offset volume declines.

o   In FY25, cement sales volumes in South Africa and Botswana fell by 2.3% year-on-year, amid heightened competition across the industrial, construction, and retail segments.

o   In FY25, impairments totalled R181 million, down from R267 million in FY24. Finance costs declined by 19.1% to R106 million, driven by reduced long-term borrowings in South Africa and lower interest rates.

·        International (Zimbabwe)

o   PPC Zimbabwe cement volumes decreased by 5.5%, due to the construction and infrastructure sector in Zimbabwe remaining sluggish, with few new projects and consistently low demand for cement products.

o   As of 31 March 2025, PPC Zimbabwe remained debt-free, with unrestricted cash rising to R118 million from R40 million the previous year. Notably, 94% of this cash is held in hard currencies. The business also declared and paid US$13 million in dividends, up from US$11 million in FY24.

o   PPC Zimbabwe achieved a 26% increase in EBITDA and 7% rise in EBITDA margin. This was driven by tight cost control, increased use of blended cement, and improved pricing strategies.

o   Capital expenditure rose to R147 million in FY25 from R105 million in FY24, mainly due to increased maintenance at the Colleen Bawn plant.

Analyst thesis

•    We maintain a hold recommendation, even though our intrinsic value has an upside of 10%, acknowledging some of the risks that comes with this upside and require more upside to balance the risk vs reward relationship:
•    PPC has implemented price increases to offset ongoing volume declines. However, the ability to pass on higher prices is limited by strong competition and the prevalence of lower-cost alternatives, which continue to erode market share.
•    Although lower interest rates, urbanisation, and increased infrastructure activity offer a supportive backdrop for cement demand, PPC’s volumes are expected to remain under pressure due to intense competition and a lack of significant large-scale infrastructure projects.
•    The "Awaken the Giant" turnaround plan is central to PPC’s strategy, the success of this strategy is expected to underpin PPC’s ability to navigate industry headwinds.
•    The 30% cement surtax introduced by ZIMRA in 2025 helps shield PPC Zimbabwe from unfair import competition, however, it may also slow Zimbabwe’s construction industry.