• PPC Zimbabwe posts record US$36 million dividends, volumes up 22%, margins at 26.9%
• Contrasts sharply with Old Mutual's R1.5 billion Zimbabwe drag and KPI exclusion
• Hard-currency cement model unlocks remittances that financial services firms cannot access

PPC Zimbabwe has emerged as the standout performer in the cement group's ten-month operational update to 31 January 2026, generating record cash flows that drove a fivefold increase in dividends to its South African parent.

The result sits in sharp contrast to a growing narrative of foreign-affiliated companies either writing down their Zimbabwean operations or quietly reclassifying them as assets too structurally constrained to attract incremental capital.

The timing matters. Just a day before PPC released its update, Old Mutual Limited published full-year results showing a R1.496 billion drag on group headline earnings attributed directly to Zimbabwe, with the parent formally excluding the country from its key performance indicators and placing it in an evaluate and pivot strategic category, the same bucket as early-stage growth markets where repatriation uncertainty caps the expected return on capital deployed.

Old Mutual's challenge is one that many foreign-affiliated financial services businesses in Zimbabwe share: earnings are generated locally in a market where the pathway to converting those profits into distributable hard currency at the parent level is constrained by Zimbabwe's foreign currency remittance framework for investment income.

The result is a structurally stranded earnings pool valuable in local terms but largely inaccessible in group terms.

PPC Zimbabwe however declared and paid dividends of US36 million, equivalent to R595 million, in the ten months to January 2026. This compares with US8 million paid in the comparable period, a 350% increase in US dollar terms.

The dividend quantum is not merely a financial headline. PPC's board has explicitly indicated it will consider a shareholder distribution tied to its policy of flowing through dividends received from Zimbabwe.

The record payout from the Zimbabwean subsidiary therefore has a direct potential read-through to what JSE and ZSE shareholders may receive. At 31 January 2026, PPC Zimbabwe remained debt-free and held US$7 million in unencumbered cash.

Distinctly cement is a hard-currency business in Zimbabwe in a way that insurance and savings products are not. PPC Zimbabwe sells cement at USD-denominated prices into a market where construction activity, infrastructure investment, and retail building demand are growing in real terms.

The revenue is collected in dollars, the margins are earned in dollars, and the surplus cash can be declared as a dividend and remitted at commercial rates because it flows through the current account of trade, not through the investment income channel that constrains financial services businesses.

Old Mutual's premiums, investment returns, and fee income, by contrast, sit on the investment side of the balance sheet, where Zimbabwe's remittance framework imposes the structural restrictions that drove the group to exclude the operation from its KPIs entirely.

This distinction explains why the foreign firms most visibly retreating from or impairing their Zimbabwean positions have predominantly been in financial services and capital-intensive manufacturing where USD revenue generation is either indirect or dependent on market-linked instruments.

Whereas companies selling physical goods priced in hard currency into strong local demand, cement, beverages, fast-moving consumer goods have generally continued to extract dividends and generate returns that justify their continued operational investment.

Volumes in Zimbabwe grew by more than 22% in the ten months to January 2026 relative to the comparable period, driven by demand across both the industrial and retail sectors.

Revenue rose 19% in rand terms and 24% in US dollar terms. EBITDA grew 23% in rand terms and 28% in USD terms, with the EBITDA margin expanding 0.9 percentage points to 26.9% from 26.0% after recovering from a longer-than-usual maintenance shutdown in the first quarter.

At 26.9%, PPC Zimbabwe's margin is nearly ten percentage points above the South African cement operation and comfortably outperforms the group average.

One development that injects uncertainty into the near-term Zimbabwe picture is a mill gearbox failure at the Bulawayo factory on 3 February 2026, shortly after the reporting period closed. Management has implemented mitigation measures but acknowledged the failure will temporarily suppress margins in February and March 2026.

The operational disruption does not change the structural investment thesis, but it is a reminder of the execution risks inherent in a market where specialist engineering capacity and supply chains for heavy manufacturing components are constrained.

At the group level, adjusted EBITDA grew 22% and the adjusted margin strengthened to 19.4% from 16.6% in the comparable period.

South Africa and Botswana delivered a 17% increase in adjusted EBITDA despite flat overall volumes, with the margin expanding to 17.3% from 14.8%, a result of deliberate prioritisation of margin over volume.

Free cash flow in the South African group was R567 million, below the prior period's R692 million due to an inventory build of R208 million ahead of maintenance shutdowns at two major plants commencing March 2026.

The South African group held a net cash position of R367 million at January 2026, against R106 million a year earlier. Capital expenditure on the RK3 integrated cement plant in the Western Cape reached R491 million in the period and remains on schedule and within budget, with meaningful earnings contribution targeted for FY28.