HomeBusiness DigestLafarge rues power cuts impact

Firms lose focus on hard currency

LAFARGE Cement Zimbabwe  chairman Ashton Masunda said  frequent power outages experienced countrywide severely affected  production as  depressed activity in the first quarter and high maintenance costs throughout last year eroded margins and profitability.

In its financial results for the year ended 31 December 2009, the cement producing firm said construction activity improved but remained constrained due to inadequate working capital.
“Plant performance was also severely affected by frequent stoppages caused by power outages,” said Masunda.
However, further funding will be required to enable critical plant rehabilitation and mines development to be carried out.
Lafarge, formerly Circle Cement Ltd, earned a profit attributable to shareholders of US$2,7 million, which it said constitutes the first positive performance in a number of years. The company earned gross revenue of US$28, 3 million in 2009.
Masunda said domestic and export volumes were up by 16% and 23% over 2008.
He said his firm is counting on “political stability and investor confidence” as they are vital for the growth and development of the country’s infrastructure.
“The Zimbabwe economy is expected to continue to grow with increased activity in mining, construction and infrastructure development,” he said.
The company said the operating environment had improved since the introduction of the multi-currency system in February last year as there was growth in most sectors of the economy.
“GDP growth was estimated at 4,7%, the first in more than 10 years. The operating environment was, however, characterised by
tight liquidity due to the limited foreign currency in circulation. Construction activity improved but remained constrained due to inadequate working capital,” Masunda added.
He said the firm however remained dependent on foreign suppliers for most of its equipment, spares and technical assistance.
Lafarge controls about 40% of the country’s cement market.

 

Nqobile Bhebhe

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