Lafarge revises 2012 revenue upwards, again

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LAFARGE has for the second time revised upwards its revenue forecast for the full year to December 2012 after the group recorded an eight hundred-fold increase in profits for the six months to June 30 2012.

Report by Staff Writer
The cement production group is now forecasting its year-end revenue to reach US$70 million, nearly US$10 million more than the US$62 million projection it made at the annual general meeting in May this year.

 
Group MD Johnathan Shoniwa told analysts on Wednesday that the performance was driven by escalating demand for its products. He said in the six months to June, industry-wide demand for cement grew 190,9% to 429 000 tonnes, with Lafarge’s volumes up 44% to 174 000 tonnes.

 
Shoniwa said Lafarge’s market share had increased significantly as the group had upped its production and improved its sales and marketing efforts.

 
Revenue in the six month period grew 57% to US$34,4 million while earnings before interest, taxation, depreciation and armotisation (EBITDA) increased to US$6,3 million from US$1,9 million. Lafarge reported an operating profit of US$3,8 million in the half year, from a loss of US$400 000 in the comparative period last year.

 
The group reported a bottom-line of US$2,7 million, reversing a loss of US$368 000, and resulting in earnings per share of US3,5 cents.

 
Shoniwa said that by product line, cement brought in the bulk of revenue at 89% (US$30,7 million); clinker 6% at US$2 million while aggregates accounted for the balance at US$1,7 million.

 
He noted that margins were low, a development that was largely consistent with the state of the economy. Gross profit was at 29%, operating profit margin at 10 EBIT at 17%, and profit after tax at 7%.

 
The margin performance also took into account the cost of the group’s rightsizing at a cost of US$1,7 million.

 
Total capital expenditure was US$1,6 million from US$5,3 million last year but the group still had a budget of US$4 million yet to be spent. Capacity utilisation was around 80%.

 
Going forward, the group said it would look at diversifying revenue streams and investing in plant.

 
Lafarge’s Manresa plant is on the eastern boundary of Harare, giving it the advantage of being the closest cement producer to the economic hub of the country. Harare accounts for 80% of the country’s cement intake.

 
The plant, with a capacity of 450 000 tonnes, makes up a third of Zimbabwe’s installed cement volumes. From lows in 2008, the recovery in the cement market has been swift but demand at 429 000 tonnes remains well below the highs of 1,1 million tonnes achieved in 1999. Shoniwa said total market capacity was at 1,5 million tonnes.

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