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.