Home » Industry » Lafarge Revenue Declines 11PC

Listed cement manufacturer, Lafarge Cement Zimbabwe’s revenue for the year-end to December 2014 was down 11 percent to $60 million from $67 million of the previous period as a result of a reduction in local sales volumes. The liquidity constraints and the low average manufacturing capacity utilisation, which was reported at 36,3 percent compared to 39,6 percent for 2013, continued to have an aerse impact on the company’s business activities.

“The gross turnover in 2014 declined 11 percent to $60 million following a 7 percent reduction in local sales volumes and 3 percent reduction on average cement selling prices.

“The continued frequent power outages and retreating commodity prices did not spare economic performance and operating efficiencies of the company itself,” said Lafarge Cement Zimbabwe chief finance officer Mr Farai Matanhire at the company’s analyst briefing yesterday.

The company incurred high maintenance costs in the first half of the year, following major plant maintenance works undertaken to improve the plants performance.

However, despite high maintenance costs that led to a half-year loss, the company returned to profitability in the second half of the year.

Resultantly the company recorded a modest operating profit before income, finance costs and tax of $1,1 million which was about $5 million aerse to that achieved in 2013.

The decline in operating profit was a result of low sales revenue and high production costs incurred during the year. Consequently profit before tax declined $4,8 million to $0,4 million compared to 2013.

“The impact of low sales volumes and late payments by customers due to prevailing liquidity crisis resulted in an increase in debt.

“The company incurred an additional $0,2 million in finance costs as short-term borrowings were increased to meet its working capital requirements,” said Mr Matanhire.

Cash generated from operations for the period decreased to $5,7 million compared to $11,6 million recorded in the previous year. The aerse change was a result of lower EBITDA of $6,1 million compared to $13,6 million of 2013.

The current assets of the company excluding cash and cash equivalents increased by $2 million to $29,6 million due to an increase in critical maintenance spares required to shorten plant stoppage durations due to breakdowns.

Lafarge Cement Zimbabwe chief executive Ms Amal Tantawi said despite the prevailing harsh economic environment, the company invested $7,2 million in capital expenditure of which about $5 million went towards limestone quarry development.

Going forward she said, although trading conditions are expected to remain difficult this year, the company remains optimistic about the Zimbabwean economy.

“Some growth will be recorded from the anticipated increased activity in mining, construction and infrastructural development.

“The prospects for further growth in the medium term, for domestic cement demand remain g and the company is well positioned to capture that growth,” said Ms Tantawi.

She said the company’s market share is currently sitting at 30 percent while the company’s 29 percent of sales volumes were local, focusing on individual home builders.

Ms Tantawi said demand for cement and clinker exports in the company’s traditional markets remained low and clinker export volumes declined.

Source : The Herald