“Export volumes declined by 36% as a result of low demand and our prioritisation of supplies to the domestic market. Gross revenue increased by 69% to US$17,2 million, mainly because of higher volumes of domestic sales,” Masunda said.
During the period under review, operating margins improved to 13% from -1% from the same period last year. Last year production rose to 72% from 62% in 2008.
But Lafarge hopes cement demand will be stronger in the last half of the year. In a statement attached to the group’s interim financial results to 30 June this year, Masunda says domestic demand for cement is expected to “remain firm”.
He said: “Domestic demand for cement is expected to remain firm. In line with seasonal demand, revenue in the second half of the year should exceed that of the first half.”
Masunda said margins would also improve modestly due to maintenance costs required to restore plant and equipment to an acceptable condition.
Cement manufacturers had significantly suffered from a hyperinflationary environment as well as government price controls, which resulted in a haemorrhage of the construction sector before official dollarisation in February last year.
“Finance costs were US$148 000 compared to US$89 000 last year due to the increase in short-term debt working capital requirements,” Masunda said.
He said planned capital projects for the first half of the year could not be undertaken due to cash flow constraints. Consequently, facilities of US$3 million offshore and US$2 million on shore were mobilised and US$2 million has been drawn to date.
Lafarge recently said that it had received US$3 million from its parent company, the French-based Lafarge Group, for the refurbishment of plant and machinery. The funds would be released in tranches during the remainder of this year.
“The market value of investments in listed securities decreased by US$142 000 compared to a gain of US$859 000 for the same period last year. Exchange gains of US$673 000 were realised compared to a loss of US$706 000 due to the appreciation of the US dollar against major currencies,” he said.
Last month, Lafarge warned its customers to guard against extortion in a market struggling with poor supplies, over a month after rival Pretoria Portland Cement Zimbabwe (PPC) urged consumers to resist high prices triggered by a shortages of cement.
Lafarge said prices for its 50kg cement bags were within the US$7 to US$8 range, warning that prices above this range were unsanctioned and way above recommended retail prices.
Some dealers have been hiking cement prices to between US$12 and US$15, way above recommended retail prices.
Masunda said the group remains exposed to foreign currency fluctuation as most critical spares, equipment and technical assistance are imported from Europe, Asia and South Africa.
Profit attributable to shareholders increased by 84% to US$1,5 million compared to US$807 000 last year. Basic earnings per share were US$0,02 for the first half of the year. Last year US$0,01 was recorded.
Lafarge Cement Zimbabwe, formerly Circle Cement Limited, is part of the Lafarge group, headquartered in Paris. It has a presence in more than 79 countries around the world and employs about 90 000 people internationally.