Circle Cement experiences subdued demand

Circle Cement experiences subdued demand
Published: 27 March 2007

Circle Cement says it has experienced subdued demand for cement due to the downturn in construction activities in the country.  
 
But the company still pins its hope in the booming construction industry in South Africa ahead of the 2010 edition of the World Cup.  
 
The company predicted limited activities in the mining sector, infrastructure rehabilitation and residential construction would affect cement business in future.  
 
Circle Cement noted that operating environment has remained difficult during 2006, characterised by hyperinflation, persistent shortages of raw materials and foreign currency.  
 
However, the second half of the year saw an increased regional demand for cement and clinker driven mainly by the 2010 World Cup construction in South Africa pushing Circle Cement turnover for the year ending December 2006 to $11.99bn compared to $620m the previous year. 
 
Profit attributable to shareholders stood at $3.9bn compared to a loss of $0.1bn in 2005 despite the low business.  
 
A 17 percent decline in the volumes of domestic sales was equally compensated by an increase in the volumes of export sales, which grew by 17 per cent.  
 
The improvement in this year’s results is due to enhanced performance of the plant following prior years of repairs and refurbishment.  
 
Although the group did not declare a dividend, earnings per share rose to $49.22 from a loss of $0.67 the previous year.  
 
"The relentless pressure on the input costs and margins will persist as long as inflation remains at the unsustainably high levels that we are all experiencing at the moment.  
 
"The group continues to implement performance improvement initiatives in an endeavor to mitigate the effects of the input cost increases," said the group.  
 
Larfage, a France-based company, is the major shareholder in Circle Cement.  
 
The other members of the group include Zambia’s  Chilanga Cement, Portland Cement Company (Malawi), and Mbeya Cement Company (Tanzania).  
 
Circle Cement’s own subsidiaries include Snolime Liwash, Colorbrite Limewash, Cemwash, Cement Coating, Impermo Water-proofing Coating, Cemporover Sealer and Concrete Aggregates, all of whom are leading suppliers to the construction industry.