JSE-listed cement and construction materials company PPC says its turnaround plan continues to yield positive benefits as evidenced in the company’s performance for the ten months ended January 31.

PPC started with its Awaken the Giant turnaround plan a year ago, following the appointment of CEO Matias Cardarelli and other changes to the executive leadership team.

The plan was developed to improve the group’s performance, as well as to identify strategic opportunities. The first key steps included personnel changes, simplification of its organisation structure and realignment of the organisational culture to ensure a results-orientated focus, cost discipline and a sense of urgency.

The company has also noted gains in its commercial, operational and supply chain divisions, having conducted plant sourcing optimisation, sales product mix enhancement, improved thermal energy costs and better logistics management.

These changes have resulted in increases in PPC’s earnings before interest, taxes, depreciation and amortisation (Ebitda) margin and cashflow generation.

Compared with the ten months ended January 31, 2024, PPC’s group Ebitda margin improved from 13.4% to 16.6% in the reporting period, which resulted in a 20% total group Ebitda increase.

The South Africa and Botswana operations’ free cash flow increased by 90% to R692-million in the period under review from R354-million in the prior comparable period. Ebitda increased by 32%, while the Ebitda margin expanded from 11.4% to 14.8%.

The improvement in Ebitda was despite 1% lower year-on-year sales volumes in South Africa and Botswana.

As at January 31, PPC’s South African and Botswana operation was in a net cash position of R106-million.

This while the PPC Zimbabwe operations remained debt free and held $13-million in cash at the end of January. PPC Zimbabwe also increased its free cash flow generation, leading to an increase in total dividends declared and paid of $13-million in the year-to-date, compared with $11-million of dividends having been paid in the prior corresponding period.

PPC says that, while most of the operational improvements are yet to materialise, the margin increases reflect the impact of the early delivery of a reduction in general and administrative expenses and a contribution margin increase.

Meanwhile, PPC is in the final stage ahead of seeking board approval for a new integrated cement plant in the Western Cape, which will secure PPC’s cost competitiveness and low-carbon cement leadership.

The plant will be built on a turnkey engineer, procure and construct contract which will significantly de-risk any capital overruns.

The material reduction in variable costs owing to technology – and fixed costs owing to only operating on one site – makes the plant value accretive, compared to continuing with its existing plants in the Western Cape, without relying on market growth.

“While the significant operational improvements are still gaining momentum, the improvement of the results in the current period already reflects early delivery of the turnaround plan, ahead of the previously advised timeline,” PPC states.

PPC is considering declaring a dividend for the full financial year to end March 31.