Lafarge in strong post-Covid-19 lockdown recovery
CEMENT manufacturing giant, Lafarge Cement Zimbabwe (Ltd), has recorded a strong come back from the Covid-19-induced slowdown of business operations as indicated in the company’s half-year performance results.
Closing the period with a 27 percent revenue growth and a nine percent improvement in gross profit margin, the company reported a fair start to the year, recording a marginal 1,4 percent growth in volumes in the first quarter against prior year in spite of a prolonged plant maintenance shut down which encroached the month of January 2020 from December 2019.
The business, however, posted a sharp volume decline of 71 percent in April when the country went into the Covid-19-induced total lockdown, but closed the second quarter with a strong 58 percent narrowing of this volume gap as the lockdown restrictions were progressively relaxed and economic activity resumed.
The company, therefore, closed the half year at 14,1 percent volume decline against prior year, largely in line with market trends. A further narrowing of this performance gap was recorded in the month of July, post the reporting period, to six percent against prior year in the same period, indicating a steady post-Covid-19 lockdown
recovery for the business.
In a statement issued by the company’s chairperson, Kumbirayi Katsande, in the half year condensed financial statements, Lafarge attributed this fair business performance in the current less than predictable operating environment to a strong focus on delivering the strategic agenda priorities, agile responsiveness to external factors
and consistency in cost rationalisation, innovation as well as efficiency initiatives.
“The same initiatives have resulted in an overall decline in the company’s operating costs by 10 percent,” he added.
The company recorded a net profit after tax of $247 million versus a net loss of $57 million prior year, same period. Lafarge reported that operations were weighed down by foreign currency shortages which drove up foreign exchange losses to $335 million compared to a gain of $5 million in the same period last year.
The foreign exchange losses were mainly owing to the huge foreign obligations accumulated by the company over the last few years.
However, the recent monetary policy changes which allowed businesses to trade in foreign currency have improved foreign currency inflows for the company and the firm has made significant strides in settling its foreign obligations.