Jimmy has arrived! Lafarge in 2018 in Perspective
Construction, Lafarge
Jimmy Khan CEO Lafarge Zambia

On March Wednesday 4th, Jimmy Khan, the brand new CEO of Lafarge Zambia was unveiled at his first Zambian Annual General Meeting by the cement maker. Flanked by Board Chairman, Muna Hantuba, this market the first sighting by shareholders of their new leader.

Although credit has to go to former CEO Vincent Bouckkaert, who left “Cementville” at the epilogue of last year, all eyes were on Khan at their recent event.

In his opening remarks in his letter to shareholders, Jimmy acknowledges (through implication) that they are in fierce competitive waters. “We remain focused by striving to maintain a 35% market share”, wrote the Jimmy in the annual report presented to shareholders in Lusaka. However, he reveals a strategy of continued innovation on the part of the company in order to remain relevant in this oligopoly market. “..to continue being innovated and customer centric”.

Pausing for a minute and skimming through the rest of the preliminary pages of the annual report reveals their continued strategy of introducing new products to the market. In 2018, the unveiled Mining Cement and Special Projects Cement products which increased by the flavour of options for consumers. This move now cements the company as the only one with the largest selection of cement products on the Zambian market. Furthermore, as if different flavours of cement were not enough, they unveiled “SupaBlock” their response to Sinoma’s brick.

Furthermore, getting closer to the consumer and allowing their innovative building techniques to be part of the consumer experience through their Binastore has delivered on the desire to be customer centric.

In 2019, the Lafarge board is determined to implement their new strategy. “The company’s focus in 2019 and beyond to continue ensuring accelerating LafargeHolcim’s new Strategy 2022 – “”Building for Growth”, which aims to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders”, read Board Chairman, Muna Hantuba’s letter to shareholders.

A look at the company’s sales over the last 6 years reveals that in the last 3 financial years (2016 to 2018) the company has lost approximately 30% in market share of cement sales to competition. Furthermore, export sales have also struggled during the same period. Jimmy attributes this to the opening of a new cement production plant in one of their key markets (Malawi) as well as a slowdown in another (Congo). The latter will obviously be heavy on Jimmy’s mind as Congo now settles following their recent election and new leadership that is aiming at transforming the country. “..with many projects halted in view of the elections of December 2018. Construction activity is however expected to resume in early 2019”, read Jimmy’s letter to shareholders.

Investors in Lafarge equity on LuSE have suffered a 66.6% loss in share price over the last 12 months. The stock has been one of the contributors to the reduction in value of the LuSE All Share index. Holding on to the share has had some investors skeptical of how the company will perform with all competition. With a price to book ratio of less than 1 (0.67), the stock is currently undervalued. This is something that Jimmy has no control over. However, echoing prospects of continued and improved profitability can inspire the skeptics.

Source: Bloomberg Terminal

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