Lafarge shifts focus to paint

HARARE - Lafarge's Zimbabwe unit says it is shifting focus to products such as paint and aggregates to drive revenue as cement demand has softened.

This comes as the prevailing liquidity crisis in the country has dampened construction activity with subsequent impact on cement sales.

“We are now on a drive to focus on our paints and aggregates businesses. We are even involved in supporting the agriculture sector through supplying lime,” said the group’s finance director Farai Matanhire on the sidelines of a handover of 10 homesteads to families that were relocated from Lafarge’s limestone quarry mine in Uzumba Maramba Pfungwe to Murehwa District.

He said the French-controlled company had adopted a new thrust of “ensuring that we supply a complete set of all the requirements as Lafarge seeks to strengthen its position in the market.”

“The third quarter of our financial year is usually our peak demand period, however, volumes are not at the levels we had anticipated mainly because of liquidity challenges,” said Matanhire, adding that Lafarge planned to supply all building requirements under one roof.

He noted that the company was pinning its hopes on a number of projects that had been put on hold due to lack of funding.

The cement maker expects to meet its year-end target of 350 000 tonnes despite production for the year to date slumping 7,8 percent compared to same period last year.

The bulk of the firm’s cement supplies have been towards construction of residential housing and expects volumes to go up by 15 percent in that sector next year depending on the progress of the country’s economic recovery.

Over the last five years, the Zimbabwe Stock Exchange-listed cement maker has injected almost $25 million in its plant upgrade, a move that has boosted production and improved products supply.

The group projects full year revenue earnings to rise to $90 million on the back of significant individual home builders demand continuing to support the upward trend.

The cement maker is a subsidiary of the French-based Lafarge group operating in over 64 countries, generating annuals sales of Euro15,8 million.

It is 76 percent owned by Lafarge international while 21 percent is held by locals.

The remaining three percent is also foreign-owned.

Lafarge’s plans to reduce its foreign ownership to 49 percent in compliance with the country’s indigenisation laws have been approved by the Indigenisation ministry.

Meanwhile, the local unit’s after-tax profit for the half-year ended June 30, 2013 declined by 3,8 percent to $2,6 million due to lower sales volumes and the payment of retrenchment costs.

During the period under review, total revenue amounted to $32,2 million, six percent lower than the $34,3 million generated during the same period last year.

The group attributed the revenue decline to the prevailing liquidity and depressed cement sales.

Comments (2)

I think Lafarge is one of the companies in Zimbabwe that suffers from the Icarus Paradox. The company has completely failed to transform and reform. They think they are still the company. I think its high time Lafarge as a company start to be as flexible as PPC that now dominates the local cement industry. I am alarmed by someone who says that demand for cement has softened. Thats a pure lie and misinformation to all stakeholders concerned. I think for Lafarge to now venture into paint there are fearing the competition that there are facing from PPC. But i am sure in the paint market they are going to receive an equal battering. Reform and transform Lafarge!

Developer - 25 November 2013

The demand for cement has indeed softened. The biggest consumer of cement is not residential projects but commercial developments like large buildings. Projects like dams, cement stabilised highways consume up to 500,000 of bags per project as compared to less than 200 per each residential unit. In any case during peak construction in Zimbabwe, residential projects were still there aiding to the demand. Zimbabwe has a per capita consumption of cement at 40kg. this is quite low. The two players will eventually succumb to competition from Sino cement in Gweru if the Chinese become the largest investor in infrastructure projects.

Brian - 25 November 2013

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.