Currency depreciation dogs Lafarge

12

LAFARGE Cement Zimbabwe (Lafarge) anticipates a decline in full year volumes as demand remains constrained due to the deepening liquidity crisis being experienced in the market.
The firm reported a 3,4 percent decline in sales volumes to 162 000 tonnes during the first half of the year.
During the period under review, the cement market saw an 18 percent decline in volumes.
Kumbirai Katsande, Lafarge’s chairman said following the currency reforms in February, the exchange rate has been depreciating steadily and this has negatively impacted the operating costs of the business as significant components of the plant spares and raw materials such as packaging were imported.

“The deteriorating exchange rate will result in increased costs for the business. The business is working in installing independent power generating capacity to augment ZESA supplies. The business will continue to focus on improving plant reliability and has scheduled major shutdown in order to fully renew its plants and ensure that cement demand can be adequately serviced,” he said.
“Following the change in currency, the business is reporting its financial performance in ZWL and in line with SI 33/2019, the prior period comparative numbers have been converted from US dollars to Zim dollars at a rate of 1:1. The business managed to achieve relatively good volumes in the first half of the year despite all the uncertainties and prevailing macroeconomic challenges”.
The company achieved revenue of $87 million compared to $33 million achieved in the first half of 2018.
Gross profit came out to $36,5 million, which represents 42 percent of sales compared to the prior comparative period’s 33 percent.
Lafarge reported after tax profit of $2,9 million from a loss of $1,8 million in the prior year.
newsdesk@fingaz.co.zw