Lafarge Zambia cement sales volumes dip on COVID-19 and Kwacha depreciation

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  • Cement sales volumes decreased by 9%
  • Profit contracted by 72%
  • high production costs due to Kwacha depreciation

Harare – Zambia domiciled cement producer, Lafarge Zambia has not been spared from the impact of the COVID-19 pandemic as sales volumes were negatively affected for the half year period ended 30 June 2020.

According to the company, cement sales volumes dipped by 9% compared to the same period last year due to high rate of inflation which stood at 15.9% from 11.7% at the close of December.

Lafarge also highlighted that production costs were adversely affected by the depreciation of the Kwacha, and an increase in prices led to reduced margins.

“Increase in production costs due to depreciation of the Kwacha against the US Dollar and continued impact of increased energy costs has negatively impacted the margins and profit.”

The company registered a significant dip in profit of 72% from K43.1 million in the same period last year to K12.3 million in the six months to 30 June 2020.

However, sales revenue stood at K637 million for the period compared to prior comparable period in 2019 (K505 million) amidst increase in exports and local demand, representing a 27% increase.

Lafarge generated cash amounting to K16m due to decrease in receivables and inventory.

During the period under review, the company launched its Mobile Retail sale ordering application and a Digital delivery system to enable sales from any location without physical interaction as means to combat the spread of the coronavirus.

On the outlook the company said, “We remain committed to ensuring we provide a safe operating environment during this pandemic through the roll out of mobile platforms to serve the needs of our customers.

“The Domestic market has continued to be substantially oversupplied, the company continues to look to developing the export market in order to sustain growth.”

Lafarge added that, “Through our Geocycle division we are continuously looking at ways of using alternative energy sources that are more environmentally friendly and carbon neutral.” Equity Axis News

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