By Happiness Zengeni, HARARE, August 29 (The Source) – Lafarge Cement has said domestic cement sales for the first seven months of the year at 188,000 was down 10 percent to 188,000 tonnes compared to last year due to the constrained construction activity in the economy.
In a trading update, Lafarge Zimbabwe managing director Jonathan Shoniwa said construction projects have not taken off as anticipated and as a result market demand remains weak, predominantly driven by individual home building.
He said as a result, revenue was 8 percent lower at $37 million against the same period last year. Profit, excluding re-organisation costs at $6 million, was 5 percent better than in the same period last year.
The operating profit margin to sales ratio (excluding re-organisation costs improved to 15.9 percent from 12.8 percent last year. Shoniwa said further improvement is expected during the second half of the year due to improved production efficiencies following the successful completion of a plant maintenance exercise.
“Traditionally, cement demand is better in the second half of the year compared to the first half and this trend is expected to continue this year,” he said.
Shoniwa said $2.3 million will be spent on plant, sustaining capital expenditure during this half, which is expected to improve plant efficiencies.
Cash generation is also expected to improve in line with improved operating margins and working capital management.