Rising South African input costs impacting Lafarge margins

Lafarge South Africa has said it may raise cement prices on the local market due to higher fuel and electricity costs.

Thierry Legrand, country chief executive, said last week that increasing input costs were having an impact on margins and had not been fully recovered in previous price increases. He said fuel costs rose by 21 per cent in 2011, 16 per cent last year and nine per cent so far this year, while electricity costs were increasing annually by more than nine per cent. As such, the company has been “concentrating on cost reduction and optimization opportunities,” he told Pretoria News.

On the outlook for South African cement demand, Mr Legrand said that while the short-term prospects remained challenging due to subdued economic growth and a slow uptake in infrastructure projects, he company is positive on the long term outlook. He said Lafarge’s cement volumes in South Africa rose at about 3.5 per cent last year and he expects 2.5 per cent growth this year.