Depressed construction sector hits Lafarge's Zim volumes

HARARE - Lafarge Cement Zimbabwe Limited (Lafarge) says its domestic cement volumes tumbled eight percent to 160 kilo tonnes in the half year to June 2013 due to the depressed construction activity.

This comes as building materials manufacturers, which traditionally thrive when the country is experiencing economic growth, have been severely hit by an acute liquidity crisis and influx of cheap imports coupled with limited construction projects.

“The decrease in cement sales was attributable to the depressed overall domestic demand and the prevailing liquidity challenges,” said Lafarge’s chairperson Muchadeyi Masunda.

The crisis has also been compounded by limited financial institutions’ capacity to extend mortgages.

During the period under review, combined cement and clinker sales were 12 percent lower than in same period last year while revenue stood at $32,2 million — 6,3 percent lower from $34,4 million registered in prior comparable period.

The Zimbabwe Stock Exchange-listed group recorded an operating profit margin of 11,5 percent compared to 11 percent for the same period last year while profit before tax stood at $3,7 million.

Masunda said profitability is expected to improve in the second half of the year following the successful implementation of “various cost reduction exercises”.

Profit after tax slightly declined to $2,6 million from $2,7 million.

“This was due to lower sales volumes and payment of retrenchment costs,” Masunda said, adding “the statement of financial position reflects a relatively favourable current asset position, mainly because of an increase in stock of raw materials, as the company increased its production capacity.”

“Consequently, the net cash used in operating activities was $700 000, compared to $90 000 used over the comparative period in the prior year,” he said.

Masunda pointed out that the implementation of the company’s indigenisation plan was well underway.

“Part of the process involves the establishment of a community share ownership trust with a seed capital of $3 million, whose disbursement plan is still under consideration,” he said.

Going forward, Masunda said that they were hoping to improve performance in light of prospects of recovery for the construction sector.

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