Lafarge in the red
LETTICIA MAGOMBO
Lafarge Zimbabwe plunged into the red zone reporting a ZWL$695m loss in the full year to December 31, 2021 from a ZWL$5bn profit achieved in the previous year due to the decline in revenue following a roof collapse over cement mills.
The top line plunged 35.5% to ZWL$7.2bn from ZWL$11.1bn achieved in the previous year which board chairman Kumbirayi Katsande attributed to a difficult operating environment and business interruptions owing to a roof collapse over cement mills.
“The roof collapse resulted in stoppage of cement production from October 1, 2021 up until mid-February 2022,” Katsande said.
Resultantly, volume for the financial period declined by 21% in comparison to the previous year.
“…the company resorted to selling clinker, an intermediary product, for sustenance. This business sustenance plan meant that the overall gross margins were squeezed, resulting in a decline in gross profit margins to 49.6% compared to 60.5% in the prior year,” Katsande said.
Other challenges experienced by the company included the curtailment of normal work routines, social structures and disruptions in the supply chain and operations.
However, the company experienced some highs with Katsande stating that it managed to maintain tight control over its expenditure as total expenses fell by 4.9%.
“Distribution expenses declined by 33.2% compared to the prior year, reflecting the decline in cement volumes alluded to earlier. The company instituted various measures to contain structural administrative costs, under a difficult period, resulting in a marginal 4.4% increase compared to the prior year,” he said.
The company also reported that there was significant improvement in its Dry Mortars division.
“Increased demand and capacity, following the commissioning of the new automated plant, saw the Dry Mortar business volumes grow by 19% compared to the prior year.”
Total assets grew to ZWL$11.8bn in 2021 from ZWL$6.9bn in the previous year.
Lafarge introduced its WaterShield cement, and also scaled up the SupaFix range of products in the first quarter of the year.
Despite a difficult financial year the company remains optimistic that with the slowdown of the Covid-19 pandemic there will be a return to normalcy and that there will be an increase in opportunities in the infrastructure sector as the government continues with its strategy for infrastructure development.
