Lafarge banks on highway upgrade

Lafarge banks on highway upgrade
Published: 05 October 2017
LAFARGE Cement Zimbabwe, a member of the Swiss-headquartered LafargeHolcim, last week reported declines in volumes and turnover for the half year ended June 30, 2017 but hopes major public infrastructure projects will help its business.

The company said it hoped the US$3 billion Beitbridge-Harare-Chirundu highway would underpin recovery, in the aftermath of cyclone induced losses and weak demand.

Zimbabwe's second largest cement producer saw first quarter volumes retreat by 12 percent during the review period, pushing sales down by 23 percent as the economy battled to absorb "further strain from the liquidity situation that spilled over from 2016".

These were compounded by heavy flooding during the first quarter, the costliest natural disaster to affect the country in 25 years.

During the chaos of cyclones and cash shortages, cement firms were confronted by delays in construction related projects which restrained sales, said chairman, Kumbirai Katsande.

He said cement uptake had been affected by destocking by major stockists to escape moisture related risks.

Individual housing projects remained robust during the review period, but in the absence of big infrastructure projects normally funded by government, Lafarge said the industry reported volume declines.

Lafarge volumes retreated by 12 percent.

Katsande projected a rise in sales during the second half of the year but said focus would be on developments at the 600 kilometre highway that is expected to stimulate demand for cement.

"There were no major construction projects that were started in the first half of the year but the preparatory work on the Beitbridge-Chirundu road continued in the build up to formal project rollout later in the year," he said.

"It is therefore anticipated that the company will be one of the major suppliers of cement and other related products to this key project once all the necessary formalities are finalised," added Katsande.

During the review period, Lafarge's revenue declined by 13 percent to $23,14 million on subdued demand, from $26,5 million during the prior comparable period.

Losses before interest and tax was $1,62 million, from $1,55 million during the same period in 2016.

Gross profit increased to $11,9 million, from $6,48 million the previous year.

In August last year, government signed an agreement with Geiger International and China Harbour Engineering Company, which spelt the framework for the Beitbridge-Harare-Chirundu rehabilitation and dualisation project.

The highway is Zimbabwe's busiest and most economically significant, and is part of the North-South Corridor that directly links landlocked Zimbabwe and Zambia with access to the Indian Ocean ports of Durban and Richards Bay in South Africa.

According to the Ministry of Transport, a feasibility study completed in June 2013 established that US$1,3 billion would be required for the rehabilitation and dualisation of the Beitbridge-Harare stretch, while an additional US$883 million would be required for the link between the capital and Chirundu on the border with Zambia, bringing the total project cost to nearly US$2,2 billion.

Other expenses would bring the project costs to about US$3 billion. 
- fingaz
Tags: Lafarge,


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