Lafarge records $2m loss

HARARE - Lafarge Cement Zimbabwe (Lafarge) said it would focus on improving profitability this year, after a charge related to weakening demand pushed the building-materials group to a $2 million loss for the year to December 2015.

The group’s acting chairman Muchadeyi Masunda yesterday attributed the loss to a sub-optimal portfolio and price mix, noting that the cement manufacturer’s earnings before interest and tax had also slumped 230 percent to a loss of $1,6 million from a profit of $1,2 million.

“Overall, the company made a loss after tax of $1,9 million from a profit of $80 000 in the prior year… Total assets decreased by 13 percent mainly due to the reduction in inventory arising from the obsolescence provisions,” he said.

The group’s total equity was down five percent on the back of a reduction in retained earnings driven by the loss for the year.

Masunda said the cement maker had “performed comparatively well” during the year as cement sales volumes for the year were five percent above prior period.

“Average prices experienced pressure from low-end players who demanded and received bulk discounts.

“Consequently, the sales revenue for the full year increased to $61,5 million from $60 million, representing a two percent growth by sales volumes but countered by a sub-optimal portfolio and price mix,” the acting Lafarge boss said.

Total current liabilities marginally decreased four percent to $23,3 million attributed to repayment of borrowings.

“The net impact of these movements resulted in a decrease in net working capital of $2,8 million from the prior year,” Masunda added.

Lafarge generated about $6,1 million in cash from operating activities, a 72 percent increase from prior year resulting in total available cash in the year of $8 million.

Of this amount, about $3 million was invested in property, plant and equipment as another $4,4 million went towards loan repayment.

Masunda however, said the group had closed the year without borrowing after paying off all of its bank debts during the year under review.

The chairman said going forward; the group expected the general trading environment to exert sustained pressure on prices due to the on-going economic stress. “However, we anticipate improved profitability in 2016 mainly driven by operational cost reduction measures and targeted strategic marketing initiatives,” he said.

Lafarge enjoys a 30 percent market share in the cement business and faces stiff competition from PPC and Chinese-owned Sino-Zimbabwe.

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