Lafarge Zimbabwe trims revenue forecast

Lafarge Zimbabwe trims revenue forecast
Published: 08 September 2011

Lafarge Cement Zimbabwe has trimmed its year to December revenue forecast to US$50m from US$54m, and is expecting an operating profit of US$5m, MD Johnathan Shoniwa said in a trading update.

The revenue forecast is up 20% on the full year, while the operating margin would be maintained at 10%.

“Cash generation is also expected to improve in line,” said Shoniwa.

He said while national domestic cement demand for the eight months to August 31 was 51% up from last year, export volumes were 21% below last year due to fuel and foreign currency shortages in Malawi, the group’s main export market.

Shoniwa noted there had been a marked improvement in the domestic construction sector, which now comprised 18% of sales compared to 6% last year.

Lafarge is planning to invest at least US$5m every year for the next four years as it forges ahead with its expansion programme to improve efficiency at the plant. The company has set a target of producing 400,000t of cement by end of the year.

The company’s performance and improvements manager, Edson Chakanyuka, said demand from the local industry was high due to the revival of the construction sector.

“We want to invest US$5m a year into the operation so as to improve efficiency and capacity. We also seek to modernise our equipment, replacing the old equipment with more efficient machinery,” said Chakanyuka.

He said most of the company’s cement was being bought by individuals who were constructing properties and retailers for resale.

“The local demand for cement is such that we are not able to export any. We believe the target we have set for ourselves is quite attainable. The challenge comes when we have to wait for spare parts which, at times, takes up to three months,” he said.

Source: The Zimbabwean