Lafarge’s $7mln quarry investment beginning to bear fruit, production costs down

Lafarge’s $7mln quarry investment beginning to bear fruit, production costs down

BULAWAYO, June 8 (The Source) – Cement maker Lafarge says a capital injection of $7 million in quarry rehabilitation and maintenance last year is starting to bear fruit, reducing production costs by $7 per tonne and offsetting the failure of the company’s export endeavours.

Last week, the company said at its annual general meeting that it had stopped exporting into the region, which it said is flooded with cheaper cement imports from Pakistan and the inhibitive cost of production in Zimbabwe.

But marketing and communications director, Edith Matekaire told The Source on Monday that a cost optimisation programme implemented last year to improve business performance was now paying off.

“Q1 2015 performance was in line with prior year due to cost optimisation programme implemented to improve business performance,” she said.

“The capital injection of $7 million in quarry rehabilitation and maintenance carried out in 2014 is starting to bear fruits resulting in a reduction production cost by $7 per tonne.”

Matekaire said half-year and full-year performance projection are showing similar trends to last year.

The company reported a 98 percent decline in profit to $81,000 for the full-year to December 31 compared to the previous year on low sales revenue and high operating costs.

Turnover declined by 11 percent to $60,4 million following a seven percent reduction in sales volume and a three percent drop in cement selling prices.

Maintenance costs amounted to $10 million as the company undertook improvements on its plant.

Matekaire said the company was investing in additional grinding capacity to increase capacity.

“We will continue to invest to improving our capacity and overall business performance in terms of revenue and profitability driven by cost optimisation and anticipated volumes increase. This is evidenced by year to date performance,” she said.

She said lamented the current economic flux and liquidity constraints which, coupled with high borrowing cost and competition, posed a challenge to its viability of the cement industry.