Lafarge misses revenue target

HARARE - Lafarge Cement Zimbabwe (Lafarge) missed its $90 million revenue target by 24,8 percent to record $67,6 million in the year to December 2013 due to reduced local and export sales volumes.

The realised revenue was 3,3 percent down from prior year’s $69,9 million.

Cement demand has generally been depressed due to depressed construction activity with most sales being driven by residential projects.

Despite recording an overall 5,6 percent increase in demand from 984 kilotonnes in 2012 to

1 039 kiltonnes last year, the cement maker’s aggregate demand was lower than anticipated. Johnathan Shoniwa, the group’s chairman, recently told businessdaily that although there were a number of big infrastructure projects such as the Kariba South Power Station extension and the Tokwe Mukorsi in the pipeline to spur demand, market requirements were predominantly driven by home building projects.

“This is not normal. In the construction industry you expect cement demand to be driven by big infrastructure projects, but today we see housing driving demand,” he said, adding they were “looking at between 55 to 60 percent of demand being in residential (construction).” During the period under review, the Zimbabwe Stock Exchange-listed cement maker’s after tax profit dropped 24,5 percent to $3,4 million.

Operating profit before other income, finance costs and tax declined to $5,6 million from $6,8 million due to community donations for indigenisation plan and distribution costs.

The group incurred an additional $154 000 cost as a result of high bank charges and a once off interest cost on some liabilities that have since been cleared, thus, the company’s finance costs increased to $692 677 from $538 861 in prior comparable period.

Basic earnings per share dropped to $0,04 from $0,06.

Net cash generated from operating activities increased from $4,7 million in 2012 to $9,1 million on the back of better working capital management policies.

Lafarge said it spent $10,7 million on capital expenditure projects with $6,9 million going towards mines development.

This comes as the cement maker plans to spend as much as $20 million in the short term towards a major refurbishment programme of its existing plant to augment capacity.

In the long run, it plans to establish a new plant to double output to one million tonnes per annum from an installed current capacity of 450 000 tonnes per annum.

“The project that will happen without doubt between this year and next year will be particularly to increase capacity for the existing plant.

Major rehabilitation projects are planned for this year and in total we could spend as much as $20 million,” said Shoniwa.

The local unit is a subsidiary of French-based Lafarge group operating in over 64 countries and generating annuall sales of Euro15,8 million.

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

The remaining three percent is also foreign-owned.

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