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Cement giant PPC expects its turnaround plan to take about two years to bear fruit and has warned the process is likely to lead to job losses.

The JSE-listed group has battled underperformance and decreasing profitability over several years, grappling with subdued demand amid stale construction activity and dumped cement imports and locally produced blended variants.

In his debut annual presentation to the market on Monday, CEO Matias Cardarelli said that his first 100 days at the helm of PPC had been focused on understanding the company and identifying internal gaps to be addressed for improved profitability.

The board recently shook up its executive committee, arming it with international cement industry experts to improve communication and oversight.

Weaknesses in the business’s internal data management and the availability and accuracy of relevant data were identified as one of the big risks. The previous complex organisational structure created a silo mentality and embedded a culture of lower accountability which was not conducive to delivering results, Cardarelli said.

PPC had a clear and bold plan for recovery focused on both fixing and rebuilding while also pursuing quick wins, he said. 

The turnaround plan focuses on creating a leaner, more agile company through disciplined working capital management, a contribution margin approach, improving industrial performance, and enhancing the go-to-market and logistics operating model. 

“We are launching a performance programme in all our sites that we believe in time will help us to grow our performance factors,” he told Business Day, adding that PPC was expecting meaningful results in the 2026 financial year. 

“We have an opportunity to review our commercial footprint, to expand our customer base, and by having the right data ... we can be sure of the margin contribution by product, by plant and by customers.” 

The short-term strategic focus on internal reorganisation would pave the way for growth in the next phase, however, job losses were inevitable, he said.

“We have put in place a leaner structure that we strongly believe is going to help us take decisions in a more agile and appropriate way,” Cardarelli said, “At the same time this is coming with a reduction of manpower costs.”

“I’m not looking at big job losses, we are doing this in a very reasonable and cautious way, but a headcount reduction at the end of the process is expected,” he said.

A strong performance from its Zimbabwean operation helped the cement manufacturer return to profitability in the year to end-March.

Group revenue for the 12 months increased 20.6% to R10.06bn, while headline earnings per share (heps) rose to 19c after a loss of 20c a year ago. Profit after tax was R88m from a loss of R328m the previous year.

For the first time in nearly a decade, a cash dividend of 13.7c per share was declared.

Revenue growth reflected a strong performance in PPC’s Zimbabwean operation, while SA and Botswana cement revenues increased 5.2%, driven by price increases and increased sales of clinker to Zimbabwe, which offset declining cement sales volumes.

The group’s net cash flow before financing activities from continuing operations, excluding the proceeds received from the sale of its Rwanda business Cimerwa, increased to R260m from R124m. PPC sold its 51% shareholding in Cimerwa in January 2024 for $42.5m.

It said competition remained stronger in the inland region where sales volumes had reduced, especially since January.

While the construction sector in the coastal region remained depressed, the main driver of the volume decreases in this region was in the retail sector, which was affected by low demand and aggressive price competition.

Cardarelli said the group was taking an austerity approach to general expenses and would not spend “any penny” on anything that was not needed to produce or sell cement.

PPC said overcapacity in SA and the lack of infrastructure spending and development by the government placed strain on the market and required it to mothball the Jupiter milling plant and Slurry and Dwaalboom swing kilns resulting in impairments of about R180m.

However, it said all these assets remained readily available for recommissioning should volume demand rise.

“We have opportunities to produce more klinker in all of them,” Cardarelli said. “Having the chance to produce more klinker immediately will be an advantage for both variable and fixed costs”.

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