Cement maker Lafarge is expecting to improve revenue by 10 percent
Lafarge Cement expects full year revenue to improve by 10 percent from the US$67,6 million reported last year. According to the group, last year was characterised by liquidity constraints and high costs of borrowing which had an adverse impact on business activities. The same trend had continued this year with overall cement demand for the first two months 1 percent ahead of the same period last year.
The construction sector’s contribution to revenue increased 1 percent from last year to close at 9 percent. The market still remains predominately retail at 76 percent.
Finance director Mr Farai Matanhire said domestic sales volume for the first two months of the year declined 12 percent compared to the same period last year.
This was due to delayed start ups by some construction companies following the construction sector’s annual shut-down and the excessive rains.
“Although the economy is likely to continue facing severe liquidity constraints, the construction sector is expected to register some growth arising from specific funded construction projects.”
Mr Matanhire said sales revenue to date is adverse to the same period last year due to low export sales volume. “However, the company will more than offset the loss in export sales volumes through increased local sales volume during the year.”
In the two month period, profit margins at 9 percent are in line with 2013 performance. Margins are expected to improve following the successful completion of the annual kiln shut-aims down that is currently in progress.
Revenue from non-cement products is 9 percent ahead of the same period last year. US$7 million will be spent on capital expenditure during the year.
This is expected to improve plant efficiencies. Last year, the company spent US$10,7 million in 2013 on Capex projects with US$6,9 million going towards mines development.
Mr Matanhire said cash generation is also expected to improve in line with improved operating margins and working capital management.
In the year to December, the company reported a 3,3 percent decline in turnover to US$67,7 mln while operating income dropped to US$68 million from US$5,6 million due to community donations in line with the group’s indigenisation plans.
The pre-tax margin declined 1,6 percentage points to 7,6 percent. Earnings per share was down to US$0,04 from US$0,06 in 2012. — FinX.