Lafarge braces for 30% sales plunge

Lafarge concrete mixer

SWISS-BASED cement maker Lafarge Holcim’s local unit, Lafarge Zimbabwe says it expects sales volumes to plunge 30% year-on-year in the second quarter of the year due to the COVID-19-induced lockdown.


“The declaration of the COVID-19 outbreak as a pandemic and the national lockdown effected from March 30 has an inevitable impact on Q2 2020 volumes. It is projected that Q2 2020 volumes will decline by 30%, with the possibility of spillover risks impacting the second half of the year,” company secretary Flora Chinhaire said in a trading update.

The company said while the ripple effects of the lockdown and border closures were still to be fully quantified, the effects of the COVID-19 outbreak was envisaged to spill over into the second half of the year.

“The net effect will be a slowdown in aggregate demand in the core individual home builder market with foreign funded projects becoming more and more essential in sustaining operations. Overall, we remain focused on health, cash and cost so as to close the year in a profitable position,” Chinhaire said.

She said business in the first quarter continued to be resilient despite hyper-inflation, policy uncertainty and exogenous shocks such as the drought impacting the business.

Volumes in the first quarter were 3% above budget.

The company said sales were disturbed by the high cost of living which affected the largest segment of business and individuals’ disposable incomes.

This resulted in a marked reduction in spending on construction projects.

“Although the average selling prices achieved were below those of the prior year, the product mix was favourable against budget. The business has managed to maintain distribution costs at below both prior year and current year budget,” Chinhaire said.

“Various actions to fight the potential spread of the virus among employees and contractors have been implemented, including a work from home policy that has been rolled out for applicable roles.

This has been achieved with the requisite support to ensure employee productivity and wellbeing while working remotely.”

The company said its US$2 million Dry Mortars Mix expansion project commenced in February is expected to be commissioned in August.


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