HARARE – Lafarge Cement Zimbabwe posted a loss after tax of $0, 6 million for the year to December 31, 2017, down 119 percent from a $3, 1 profit million in the prior year.
The depressed performance was on the back of a lower sales as well as a rise in expenditures.
Total sales for the year declined 4 percent to $58, 5 million from prior year’s $61 million due to reduction in in volumes.
Lafarge chairman Kumbirai Katsande said the decline in sales was however partially offset by the marginal price increase that was effected at the end of September to alleviate the impact of cost increases.
Lafarge achieved an 18 percent reduction in cost of sales following normalisation of factory operations from the upgrade of the environmental control unit which subsequently resulted in a gross profit of $17, 9 million from $11, 6 million in the prior year.
The company incurred additional costs to optimize logistics networks resulting in distribution costs increasing by 6 percent.
Administration expenses also increased by 26 percent driven by the SAP project implementation costs and current information system productivity upgrades.
Lafarge also incurred retrenchment costs in the year which reflected the partial implementation of plans targeted at managing costs.
Resultantly, profit before interest and tax amounted to $0, 86 million, down from $4, 4 million in the prior year.
As at the end of the year under review, Lafarge had no borrowings but one of its bank accounts carried an overdraft of $0, 9 million from $0, 6 million in the prior year.
The special products business segment, comprising of by products that include agricultural line however jumped 382 percent buoyed by the Command Agriculture with management considering increasing the products.
“Plans are under way to increase the output of these by-products by enhancing automation,” said Mr Katsande.
Total equity reduced marginally by 6, 5 percent to $37, 95 million due to reduction in retained earnings and a declaration of a dividend.
Mr Katsande said the firm was geared to capitalise on the increased number of construction projects across the country that will drive demand for cement.
Already, the housing construction segment as already seen incremental sales as individual investors seek safe havens for their investments creating new business opportunities for cement makers.
“Additional housing projects started mainly in the core Harare market and in fast growing towns such as Norton, Masvingo, Gweru and Beitbridge. Most of these projects are likely to run for the next two to four years.
“The Harare market in particular experienced increasing competitive pressure among the main cement producers, which focused their respective efforts to capture market share in the emerging housing projects,” he said.
The board did not declare a dividend for the period.