Price war, power failures affect Lafarge Pakistan 1H

Price war, power failures affect Lafarge Pakistan 1H
Published: 01 September 2010

Lafarge Pakistan Cement Ltd. has announced today that its net turnover for the half year ending on 30 June 2010, continued to suffer as a consequence of the ongoing price war. Its net sales was recorded at PKR3423 m (US$41.24m), a decrease of 23% as compared to the corresponding period in 2009, which resulted in operating loss of PKR303m for mid-year 2010.
 
A company official said that the plant’s operations during this period were further impeded by power failures, leading to unexpected shutdowns which resulted in an increase in the cost of fuel. In order to address the fuel cost the company has taken initiative in fuel substitution, using local coal and alternate fuels, to allow greater cost efficiency.

Maj. Gen (R) Rehmat Khan, Chief Executive of Lafarge Pakistan has observed in company’s report that the overall industry’s domestic sales volumes have improved in the first half of 2010 aggregating 12.5 Mt from 11.07 Mt in 2009; however, the industry’s export sales have declined from 5.6 to 5.1 Mt in 2010. Overall capacity utilisation within the industry has been 79 per cent during the first half of 2010 against 80 per cent for the corresponding period in the previous year.

He pointed out that towards the close of the half year the industry did witness an improvement in the selling prices. He expressed hope that this upward trend will continue. The pace of recovery however has been significantly hampered by the devastating floods which have hit the country.

Going forward he observed that there will be challenges as well as opportunities due to devastating floods. While the floods have struck a blow to the economy the devastated infrastructure will have to be rebuilt offering opportunities for enhanced cement consumption. In exports since the government has not renewed the freight equalization, this will undoubtedly affect sales.