Lafarge Zimbabwe struggles amid increasing rivalry

Malcom Sharara

Harare - Lack of major national projects and large commercial infrastructure projects saw Lafarge Cement Zimbabwe Limited report reduced revenues for the half year ended 30 June 2015.

Lafarge, whose biggest competitor is JSE listed Pretoria Portland Cement [JSE:PPC], reported a 9.71% decline in revenue to US$25.4m from the previous comparative period.

In a statement management said volumes of cement sales were 7% lower than the prior period due to consumer resistance emanating from the impact of multiple economic factors.

“The first half of 2015 was characterised by a combination of low liquidity in the market compounded by weak economic fundamentals and a poor agricultural output arising from a late erratic rainfall season,” said Lafarge chairperson Muchadeyi Masunda.

As a result the company reported a loss of $1.38m against a loss of $1.32m in the prior comparative period.

The drop in Lafarge’s revenues comes at a time when rival PPC plans to boost its production capacity to 1.5m tonnes per annum from the current 1.1m tonnes in Zimbabwe, following the completion of the company’s Msasa plant next year.

PPC managing director, Njambo Lekula said the $86m plant is expected to be commissioned in September 2016 and will have a capacity of 700 000 tonnes.

“The group expects to invest a total $200m on the Msasa plant. However the firm is still looking for a reliable source of limestone for the second phase of the project which entails establishment of a clinker plant,” said Lekula.

New competitor looming

Meanwhile, new arrival Africa’s cement mogul Aliko Dangote is reportedly planning to build an integrated $400m cement plant in the country.

Construction on the cement plant is expected to begin during the first quarter of 2016. When completed, the plant will produce 1.5 million tonnes of cement a year.