Zimbabwe: Lafarge Profit Exceeds Targets

18 November 2020

Herald Business Reporter

Cement maker, Lafarge Cement Zimbabwe Limited, says the gradual easing of Covid-19 induced lockdown restrictions and general improvement in business environment has seen its business experience a rebound in the third quarter period.

The business recorded solid gross profit margins exceeding targets on the back of cost containment measures.

Record sales were seen in the month of July, which according to the group was the best for the same month since 2003.

Resultantly sales volumes closed the quarter 7 percent above same period last year driven by recovery in the individual home builder market.

Demand for cement in the construction sector jumped 34 percent ahead of the previous quarter following the reopening of the economy after lockdown.

Chairman Mr Kumbirai Katsande acknowledged the improvements in the general business environment, ushered in by among others, stability in foreign currency exchange rate following introduction of the auction system.

As a result, the company was able to meet its foreign currency obligations.

"The operating environment showed improvement influenced by easing of the Covid-19 lockdown restrictions.

"This has since allowed the resumption of economic activity, although under some health and safety compliance requirements.

"As business activity progressively continued to gain momentum into Q3, the demand for cement consequently outstripped supply causing considerable supply backlog," he said.

During the quarter under review, dry mortars business grew 64 percent in volumes compared to the same prior year period due to increased demand for SupaGrow, the agricultural lime range during the winter land preparation.

"This was further compounded by the widespread application of the Pfumvudza agriculture concept," said Mr Katsande.

However, variable costs during the period rose markedly due to replacement costs for imported spare parts and the high electricity tariff implemented by ZESA.

During the quarter under review, ongoing capital projects for the Dry Mortars resumed although at a shower pace due to Covid-19 related travel restrictions.

Commission of the new Dry Mortars plant is now scheduled for the last quarter of the year.

While the favourable rainfall forecast will play well for the agriculture sector and the whole economy, the impact of Covid-19 on businesses is expected to continue in the foreseeable future.

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