Lafarge Zambia Plc has reported a surge of 27% in revenue at half year in their current financial year compared to the same period in the previous year, according to a statement from the cement maker.
The company attributed the surge due to increased local demand and exports. “Sales revenue at K637 million for the period up by 27% compared to 2019 amidst increases in exports and local demand”, read a statement from the unaudited half-year results for 2020 which were published on 10th September 2020.
Ironically, cement sales volume decreased by 9% over the same period in 2019. Thanks to inflation and a market wide increase in retail prices, the company was able to achieve higher sales revenue.
The macroeconomic fundamentals have impacted the cement industry. Production costs for Lafarge have been adversely affected by the depreciation of the Kwacha, and increase in prices leading to reduced margins. The impact of the Covid 19 Pandemic has not spared Zambia. With inflation at 15.9% from 11.7% at the close of December 19, sales volumes have been negatively impacted. This has been further exacerbated by increases in energy that has negatively impacted the margins and profit
The erosion of margins led to a loss before tax of K12 million compared to loss of K36 million at this time in 2019, a positive increase of over 66%. According to their abridged financial statements, cash generation of K16m due to decrease in receivables and inventory.
However, adversity has brought out the best out of the cement maker. The Company continued to innovate and adapt to the operating environment. For example, during this period the company launched its Mobile Retail sale ordering application and a Digital delivery system to enable sales from any location without physical interaction.