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Cement makers buck economic trend

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THE cement-manufacturing sector in Zimbabwe has remained resilient despite the Covid-19-induced economic slowdown.
Lafarge Cement Zimbabwe and PPC Zimbabwe both reported stable performance, with demand for cement remaining firm as the construction sector is operational as an essential service provider.
Overall cement sales increased by between 10% and 15% for the full financial year to 31 March 2021 as compared to full-year 2020. Despite Covid-19, imports remained flat at 9% of total industry sales while the informal sector contributed more to foreign currency sales although the segment was heavily impacted by the pandemic.
PPC, the country’s largest cement manufacturer with annual capacity of 1.4 million metric tonnes, cement sales in foreign currency allowed the company to remain self-sufficient.
In an operational review, the group, with operations in South Africa, Botswana and Rwanda among other countries, indicated sales volumes in Zimbabwe went up by approximately 10% from the prior year.
Revenue rose 251% in Zimbabwean currency terms. However, in rand terms, revenue fell 13% while earnings before interest, taxes, depreciation and amortisation (EBITDA) went down 32%.
“The economic environment in Zimbabwe was greatly affected by the Covid-19 pandemic. The resulting lockdowns increased unemployment and impacted operations, negatively influencing volumes in full-year 2021.
“Nevertheless, PPC Zimbabwe recovered from the slow start to trade slightly above planned volumes for most of the year. The 75% depreciation of the Zimbabwean dollar against the South African rand reduced PPC Zimbabwe’s contribution to group profitability,” said PPC.
PPC’s competitor, Lafarge, reported earnings growth for the year to 30 December 2020 driven by volumes growth.
Chairperson Kumbirai Katsande said revenue for the year jumped 68.5% to ZW$6.9 billion from ZW$4.1 billion driven by volume growth in the dry mortars business.
 He also attributed the growth to a market shift towards high-strength cement, which influenced a significant change in the cement product mix.
The business lost a full month of April 2020 as the country implemented strict lockdown restrictions. However, cement volumes recovered in subsequent months, with particularly strong performance in the third quarter closing the full year cement volume performance at 6% below prior year.  Katsande indicated there was strong demand although volumes growth was limited by capacity constraints owing to the loss of production during the April 2020 lockdown.
However, its dry mortar business more than doubled sales with a 115% increase in sales volumes compared to the prior year. This followed the relaunch of its SupaGrow and SupaFix range supported by active market sensitisation of the products, which has led to wider product adoption.
While the business environment remains uncertain for many businesses due to Covid-19, cement makers are upbeat about maintaining a growth trajectory driven by various government construction projects ranging from transport, energy and accommodation infrastructure. This is in addition to individual residential projects being carried out across the country.
For Lafarge, the firm is already forecasting to double production following the completion of its three-pronged US$25 million capital expansion project with the final phase being the installation of a vertical cement mill.
“The third investment project is the installation of the Vertical Cement Mill (VCM), earmarked to double cement milling capacity,” said Katsande in a statement accompanying financials for the year to 31 December 2020.
“Civil works for the VCM have since started and expected completion date for the project is February 2022,” he said.
This comes as the company also installed alternative power infrastructure in 2019 and completion of the automated dry mortar plant in 2021.
Already, production capacity for the dry mortar business effectively increased by 1 300% to 100 000 tonnes from 7 000 tonnes per annum, making Lafarge the biggest producer of dry mortar products in Zimbabwe.
“Significant volume growth is therefore foreseen in the dry mortar business following the plant commissioning in April 2021,” said Katsande.
–STAFF WRITER

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