The cement business which had been adversely affected by Covid-19 lockdown, which brought most businesses to a standstill is now on a rebound, a player in the market, Lafarge Cement Zimbabwe Limited has said.
Following the easing of lockdown restrictions, in July and months that followed a number of businesses have been recovering from the effects of the pandemic.
In his third quarter trading update, Lafarge chairman, Kumbirai Katsande said they experienced a rebound during the period under review.
“Business experienced a rebound in Q3,” said Katsande.
“Record sales volumes were recorded in the month of July, the best for the same month since 2003. This accelerated volumes recovery closing the quarter at 7% above the same period prior year.”
Katsande said the volumes were driven by strong recovery in the Individual Home Builder (IHB) market, Concrete Plaster Manufacturing (CPM) and Roads segment on the back of strong tobacco and cotton market revenues.
“The business recorded solid gross profit margins exceeding the set target,” further said Katsande.
“This performance is as a result of intense focus on cost rationalisation. The foreign currency exchange rate ushered in stability in pricing as the market continues to see wider usage of the USD, especially in the formal market. Foreign currency receipts grew substantially in the quarter. Consequently the company was able to meet its foreign currency obligations. The business remains profitable.”
Katsande however said variable costs rose markedly during the quarter as a result of increases in replacement costs for imported spare parts and the high electricity tariff implemented by ZESA.
“Demand for cement in the construction sector increased by 34 percent ahead of Q2 following the reopening of the economy after the Covid-19-induced national lockdown,” said Katsande.
“As business activity progressively continued to gain momentum into Q3, the demand for cement consequently outstripped supply causing considerable supply backlog.”
He however added that the impact of Covid-19 on operations was expected to continue into the foreseeable future.
