Lafarge records static revenue performance

Lafarge's performance in the first 4 months was unchanged with revenue of $21.7 million, almost the same figure posted in the comparative period, MD Jonathan Shoniwa told the AGM this morning.
 
"The first 4 months were not as great as we expected but still the business is in good shape.
 
"Revenue was $21.7 million. This is about the same number we had last year," he said.
 
However, he noted that the plant reliability has improved saying their product is very strong on the market, with the group commanding a market share of 40%.
 
"From a performance point the construction industry which we mostly benefit from is heavily linked to the economic activities in the country. Last year we saw the GDP growth slowing down. I think the activity in the economy today suggests that the GDP could still be less than what we saw last year…Projections initially were at 5% but from what we're seeing it will probably be a much less number than that.
 
"This, unfortunately, is also affecting us from a demand point. We had hoped that this year we would see demand increasing by 10%-11%. This is not the situation at the moment; for the first 4 months (national demand) has gone up by 4.2%," he said.
 
A number of projects which have been lined up have not materialised because of uncertainty in the economy and this has been exacerbated by the liquidity crunch.
 
He noted that there has been some growth and they expect that it will improve although they do not see the outturn getting to the 11% that they targeted.
 
"We expect that it will be about 6%-9% for the full year," he said.
 
Shoniwa said the main challenge they are facing like everyone else is the slow settlement of debts.
 
"Money is not coming as quickly as we would have expected and this is putting a lot of strain on cash flow.
 
"We do not have any fears at the moment in terms of recoverability of all the money…but the situation is not as good as it was last year. We have seen our outstanding debtors' days deteriorating from around 15 to 30 days in the industry," noted Shoniwa.
 
He further highlighted that the other issues that they continue to look at outside of the cement business is the paint division which they expect to "grow by 30%" and the aggregates section which they also expect to "grow well."
 
"This is the section that we're focusing on a lot. In the next few years we expect that revenue contribution will improve significantly as we continue to diversify our revenue streams.
 
Shoniwa stated that profit margins are at 13% and are expected to improve.
 
"In the first 4 months we had our annual shutdown so most of the costs will be in that number. But… we expect that our margins will be around 20%," he noted.
 
He also pointed out that they had planned to spend $3.3 million on Capex during the year mainly focusing on quarrying operations and improving plant efficiencies.
 
Shoniwa also said there is nothing much happening on the export side at the moment.
 
Looking at capacity enhancement, he said; "Currently we have some projects that we are working on but it's too early for us to say exactly how we're going to move on this. But, it's one of the things that we've been looking at. How we can improve our capacity (cement milling capacity) …we're currently sitting at 450 000mt capacity and the plan is that we should be increasing…"
 
Chairman, Muchadeyi Masunda told the AGM that the firm submitted their indeginisation proposal in February and the plan was approved.
 
He also said that the firm needs to make sure that they're not left behind on developments that are happening especially in Mozambique (in the Tete region).
 
"As a group, Lafarge has got its plans at a fairly advanced stage…in the development of this region," he added.
 
All the directors were reappointed while directors' and audit fees of $17 557 and $89 625 respectively were approved. External auditors, Deloitte and Touche were reappointed as well.