Lafarge eyes $4,5m expansion

HARARE - Lafarge Cement Zimbabwe says it plans to invest an additional $4,5 million in plant expansion by year-end in order to double its production capacity to one million tonnes.

“So far we have invested $1,6 million in expansion and we will be putting in another $4,5 million by year end,” said managing director Johnathan Shoniwa.

“Our current capacity utilisation is at 80 percent and we are leveraging our current location to increase annual production capacity from the current 450 000 tonnes to one million tonnes in the near future,” added Shoniwa.

The cement maker registered a 57 percent revenue growth to $34,4 million for the half year to June 30 attributed to increased market demand and improved plant efficiency.

Shoniwa said despite liquidity challenges and low disposable incomes, the cement manufacturer performed well in sales volumes.

“Domestic sales volumes of cement increased by 45 percent compared to the prior year. The growth in cement sales was attributable to increases in market demands, sales and marketing efforts and improved plant reliability and efficiencies,” said Shoniwa.

“The high capital expenditure incurred on plant improvements in the prior years has started to bear fruit,” added Shoniwa.

A profit before tax of $3,8 million was recorded, in contrast with a loss of $400 000 in the period under review.

“An operating profit margin before finance costs and tax of 12 percent was therefore achieved for the period, compared to the prior year loss margin of 0,5 percent.

The company implemented various initiatives to reduce costs and thus achieved improved profitability,” said Shoniwa.

Lafarge’s profit after tax closed at $2,8 million, a significant improvement from the loss of $400 000 last year.

“The company implemented various initiatives to reduce costs and thus achieved improved profitability,” said Shoniwa.

“Consequently, basic earnings per share were 3,5 percent compared to a loss of 0,5 cents per share, meaning that the financial position shows an improved net current asset position mainly attributable to an increase in raw material stocks as the company increased its production capacity, “said Shoniwa.

Going forward, Shoniwa said: “The operating environment is expected to remain stable for the foreseeable future with high recovery prospects for the construction industry. The company is well positioned to respond to growth in the construction sector.”

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