Growth prospects shine in Zimbabwe's construction markets

Construction markets in Zimbabwe and South Africa are expected to maintain a strong growth trajectory, creating favorable conditions for companies like PPC to enhance their competitiveness against imports. Recent data released on Tuesday indicates that the South African cement market reached approximately 13.78 million metric tons in 2024 and is projected to grow steadily over the next decade, with an annual growth rate of 2.5% forecast from 2025 to 2034.

Zimbabwe's construction sector has also experienced significant expansion, driven by government infrastructure projects, growth in the retail sector, and increased residential housing development. This surge has benefited key players in the construction industry, including cement and brick manufacturers.

PPC CEO Matias Cardarelli expressed cautious optimism regarding South Africa's infrastructure plans under the government of national unity (GNU), noting the sector's vital role in job creation and economic activity. "We believe that the administration is aware of that and that makes us optimistic we are going to see that (construction and infrastructure growth) happening in the short term," Cardarelli said.

In Zimbabwe, where PPC is advancing with a solar power plant project, Cardarelli confirmed that the construction market continues to grow annually. Despite challenges such as liquidity constraints, especially in the public sector, construction companies are maintaining relatively strong order books by carefully selecting contracts to manage credit risks.

Masimba Holdings, formerly known as Murray and Roberts Zimbabwe, recently highlighted that its contracting order book remains robust, particularly in the roads sector. However, the company cited liquidity shortages as a barrier to effective project execution, leading to cash flow challenges and delays.

PPC has performed strongly in Zimbabwe over recent years, with steady market growth reflected in improved financial results. Cardarelli noted, "What we are seeing is also a market that is steadily growing year after year and we are not expecting to see any change to that."

Financially, PPC reported a 6% improvement in Earnings Before Interest, Taxes, Depreciation, and Amortization (Ebitda) margins for Zimbabwe. The company is developing a new solar power plant on an offtake basis to mitigate the impact of ongoing power outages disrupting operations.

For the year ending March 2025, PPC's headline earnings per share nearly doubled from 19 cents to 40 cents, despite a slight 1.9% decline in revenues to R9.871 billion. Ebitda surged 28% to R1.593 billion, while operational free cash flow rose to R1 billion, enabling the company to increase ordinary dividends to 17.6 cents per share from 13.7 cents the previous year.

Cardarelli attributed the improved performance to internal restructuring efforts focused on unlocking underutilized value and growing earnings. He added that the company exceeded expectations for the review period, positioning PPC well for future growth amid the dynamic construction landscapes of both Zimbabwe and South Africa.