Lafarge revenue grows 35.2 percent in quarter 1

The company's 58th AGM was held yesterday, Thursday, 17 May 2012 and all resolutions tabled were passed without amendment.

In a trading update, management reported that revenue for Q1 2012 grew by 35.2% to US$ 21.9m on the back of a 28% increase in domestic cement demand.

The market remains mainly retail with the construction sector maintaining its 18% contribution. The operating profit margin increased to 14% despite the annual kiln shutdown that was undertaken in the quarter, prior period operating margin was 10% and there was no shutdown. Kiln utilisation stands at a high of 90% up from 84% for the prior period.

The group is focusing on increasing its market share from last year, while also focusing more on the local market while excess product will be exported to Malawi.

Consequently export volumes for Q1 2012 were 26% below last year, as more focus was given to the more profitable domestic market. The company is finalising the re-organisation and rightsizing of its business. Current local and offshore borrowings amount to US$ 3.2m and are guaranteed by the Lafarge group.

Management revised upwards their FY 2012 revenue target to US$ 62.0m (initial target US$60.0m) from US$ 50.0m for FY 2011, while the operating profit margin is expected to improve to 20% compared to 11% for 2011 as efficiencies continue to improve.

The 2012 capex budget of US$ 4.0m is expected to result in better plant reliabilities and improved efficiencies. Cash flow generation is also expected to improve in line with improved operating margins.

The company continues to receive technical and financial support from the Lafarge Group. An indigenisation plan was submitted and management is confident that all stakeholders expectations will be met.

The company also has plans to increase its production capacity to 1.0m tonnes, and to increase its distribution to cover even the inaccessible areas within the country.

Mr F.F.O Essan who was recently appointed the Chief Executive Officer for Lafarge South East Africa, expressed confidence in the Zimbabwe operations, and reiterated that besides growing cement sales they were also looking at improving sales for speciality products and aggregates.

Zimbabwe is one of the three companies out of 100 Lafarge units, who are part of the Exclusive Excellence Club, after achieving 1.8m hours without lost time injuries.

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