By Alois Vinga
CEMENT manufacturing giant, Lafarge Cement Zimbabwe (LACZ) has seen sale volumes growing to levels last witnessed 17 years ago on the backdrop of exchange rate stability.
Presenting the firm’s trading update this week, LACZ chairman, Kumbirayi Katsande said the performance broke an almost two decade’s record.
“The business experienced a rebound in the third quarter record volumes recorded in the month of July were the best for the same month since 2003. This accelerated volume recovery, closing the quarter at 7 % above the same period prior year,” he said.
Katsande credited the Reserve Bank of Zimbabwe foreign currency auction system which stabilised exchange rates for achieving certainty in pricing as the market continued to see wider use of the US dollar.
“Volumes were also driven by a strong recovery in the individual home builder market, Concrete plaster manufacturing, and roads segments on the back of strong tobacco and cotton market revenues,” he said.
During the period under review, the business recorded solid gross profit margins exceeding the set target with foreign currency receipts grew substantially in the quarter.
As a result, the company was able to meet its foreign currency obligations and the business remains profitable.
Demand for cement in the construction sector increased by 34% ahead of the second quarter following the reopening of the economy after the Covid-19 induced national lockdown.
As business activity progressively continued to gain momentum into the third quarter, the demand for cement consequently outstripped supply backlog.
The dry mortars business grew by 64 % in volumes against the same period last year. This was due to the increase in demand for SupaGrow, the agricultural lime range, during winter and land preparation season.
This demand is further propounded by the widespread application of the Pfumvudza agricultural model.
However, variable costs rose markedly during the quarter due to increases in replacement costs for imported spare parts and the high electricity tariff implemented by Zimbabwe Electricity Supply Authority.