PCC is making progress on its “best-in-class” state-of-the-art cement plant in the Western Cape, called RK3, which is estimated to cost R3.1 billion.
This project is designed to secure PPC’s cost competitiveness by materially reducing the cement giant’s costs and enhancing value accretion, without relying on broader growth in South Africa’s struggling construction sector.
Founded in 1892 as Pretoria Portland Cement, PPC is one of South Africa’s oldest companies and the country’s biggest cement producer.
It came under pressure over the past decade amid a severe decline in South Africa’s construction industry, which triggered the launch of its Awaken the Giant turnaround strategy in the 2025 financial year.
This strategy is paying off in spades for the cement producer, whose bottom line is reaping the rewards of lower costs and improved efficiencies across its operations.
The success of the Awaken the Giant strategy is clearly evident in PPC’s results for the year through March 2026, released on Monday, 8 June.
PPC reported a 3.89% increase in revenue from contracts with customers, faster than the 1.80% growth in cost of sales, which reached R8.07 billion in the year.
The company’s profit for the year surged by 84.33% to R859 million, with basic earnings rising by 75% to reach 56 cents per share.
PPC attributed this strong performance to the continued execution of its turnaround strategy, which focused largely on cost containment.
The company’s headline earnings saw a smaller increase of 25% to reach 50 cents per share, mainly due to foreign exchange losses over the year.
These losses relate to foreign exchange contracts entered into by PPC for its RK3 project.
Given the substantial dollar-based capital expenditure associated with RK3, the group decided to de-risk its balance sheet from rand weakness.
However, since the rand strengthened against the US dollar in 2025, this gave rise to realised and unrealised foreign exchange losses of R148 million for PPC.
Regardless of these losses, PPC still recorded a strong performance and rewarded shareholders handsomely with a dividend of 30.2 cents per share, up 72% from its 2025 dividend.
Best-in-class cement plant
PPC’s 2026 results also gave shareholders insight into its ongoing RK3 project, which the company has described as a “best-in-class” and “state-of-the-art” facility.
First announced at the start of 2025, RK3 is an integrated cement plant being constructed in the Western Cape – and it is coming at a substantial cost.
PPC already has operations at the site where RK3 is being constructed, namely its Riebeeck factory.
Specific parts of the existing factory will continue to be used, but RK3 will render some older infrastructure redundant.
This saw PPC recognise an impairment of R155 million in its 2025 financial year related to these legacy assets.
The RK3 project is being executed under a $134 million (R2.23 billion) Engineering, Procurement, and Construction contract with global engineering firm Sinoma.
To finance this project, PPC is relying on its strong internal cash generation, with cash and cash equivalents standing at R1.09 billion at the end of its 2026 financial year.
In addition, the group is making use of amended, enhanced banking facilities secured in May 2025, which include:
- A $66 million (R1.1 billion) letter of credit facility
- A trade loan facility providing the rand equivalent of $66 million
- A R1 billion amortising loan facility, designed to repay the trade loan
By the end of its 2026 financial year, PPC reported that it had incurred R1.08 billion in project-related expenditure and had drawn R48 million from the trade loan facility.
To protect its balance sheet from the risks associated with a project of this magnitude, PPC’s board said it has planned for “conservative gearing” in its 2027 financial year.
The company is also maintaining additional headroom across its South African and Botswana facilities to thoroughly de-risk the group.
While it comes at a substantial cost, PPC believes the RK3 plant will help to secure its cost-competitiveness and low-carbon cement leadership for the future.
Once complete, this project will see PPC consolidate its Western Cape operations into a single-site operation with advanced technology, which should aid in reducing costs and enhancing value accretion. The plant is expected to produce 1.5 million tons of cement annually.
Notably, this will also enable PPC to be more resilient amid weakness in South Africa’s construction industry, making the firm less reliant on broader market growth.
PPC has said construction of RK3 will be completed in the last quarter of its 2027 financial year, and that total costs will remain within the approved R3.1 billion budget.
