Lafarge revenue up 41pc

HARARE - Listed Lafarge Cement Zimbabwe (Lafarge)’s revenue surged 41 percent to $69,9 million in the year ended December 2012, buoyed by firmer domestic sales.

The group’s local cement sales increased by 48 percent during the period under review.

Since adoption of a multi-currency system — dominated by the United States dollar — in January 2009, cement demand for individual home projects increased.

Profit after tax increased to $4,6 million from $3,5 million while earnings per share surged 32 percent to 0,06 cents from 0,04 cents in 2011.

Muchadeyi Masunda, Lafarge’s chairman, said finance costs went down 21 percent to $0,54 million as the group contained borrowings.

He said the group spent $3,5 million on a retrenchment exercise which ate into the company’s top line.

“Net cash generated by operating activities declined from $5,6 million in 2011 to $4,7 million mainly due to an increase in inventory levels and taxes paid,” he said, adding that spares stock was increased to improve the company’s preparedness for emergency breakdowns.

“Cement and clinker stocks were also relatively high as demand tumbled during the month of December owing to heavy rains.”

Masunda said local demand for cement would remain strong, anchored by growth in mining, construction and infrastructure development.

Lack of government and private sector contracts coupled with the prevailing liquidity challenges are the major factors contributing to low capacity utilisation in the construction sector — currently operating at below 40 percent.

The cement maker, however, did not declare a dividend but said it was looking into long-term and cheaper finance to mitigate non-dividend payment.

“Following several years of lack of sustainable investment arising from foreign exchange shortages, the business continues to experience urgent working capital and capital expenditure requirements to sustain plant operations and improve efficiencies,” said Masunda.

Lafarge was formed in 1956 as Salisbury Portland Cement owned by Associated Port-land Cement Manufacturer Association of the UK.

It changed its name to Circle Cement Limited in 1982 following the change of the holding company’s name to Blue Circle Indus-tries Plc.

In June 2001 it was acquired as part of a global buyout of Blue Circle Industries by French conglomerate Lafarge which has operations in 78 countries.

Masunda said the group’s plan to reduce its foreign ownership to 49 percent in compliance with the country’s indigenisation policies had been approved by the Indigenisation ministry.

Lafarge yesterday traded at 75 cents on the Zimbabwe Stock Exchange. - Business Writer

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