Recapitalisation for Lafarge Cement Zimbabwe

The financial commitment from the Lafarge Group to inject US$ 3 million into Lafarge Cement Zimbabwe for recapitalisation of operations to enhance efficiency and improve competitiveness on both the domestic and export markets, will add to the US$ 15 million capital budget that Lafarge Zimbabwe had earmarked for recapitalisation of the business for three years up to next year, according to press reports from Harare. The capital expenditure will be for the procurement of new equipment and machinery, which is expected to enhance efficiency, reduce cost and improve the company’s competitiveness.

Managing Director Jonathan Shoniwa said the US$ 15 million budget to recapitalise operations would be financed from a combination of local and external finance. Lafarge Zimbabwe is now distributing 1000 tpd of cement from its plant, of which about 85% finds its way into the local market. Production at the plant has been rising substantially since the dollarisation of the economy with demand increasing at an encouraging rate despite the lack of major construction projects in the country. Domestic and export volumes rose 16% and 23% respectively which saw the gross revenue totally US$ 28 million for the full year to December 2009. The operating environment had been greatly improved since the introduction of the multi-currency system in February 2009. However, the company pointed out that frequent power cuts, especially in the first quarter of last year, severely affected production while depressed activity and high maintenance costs throughout last year had eroded margins and profitability.

Read the article online at: https://www.worldcement.com/africa-middle-east/27042010/recapitalisation_for_lafarge_cement_zimbabwe/