THE
LafargeHolcim Group has availed US$25 million to its Zimbabwe subsidiary to
increase its capacity utilisation, but the expansion programme hinges on the
availability of electricity and government’s ability to resolve the currency
crisis.
The US$25 million capital injection
was revealed during a two-day working visit by regional head of the Middle East
and Africa and member of the group executive committee of LafargeHolcim, Miljan
Gutovic.
“During the visit, Miljan Gutovic
paid a courtesy call on HE the President of the Republic of Zimbabwe, Emmerson
Dambudzo Mnangagwa.
“In this meeting, strategic
commitments were made by the LafargeHolcim Group including a commitment to
continue support for the growth of the Zimbabwean economy.
“This is in-line with an initial
US$25 million, three-pronged expansion project at Lafarge Cement Zimbabwe that
has been approved by the group,” LCZL said in a statement.
“Initiatives under the expansion
project will include: additional cement capacity, additional capacity for
agricultural lime and automation of the dry mortar plant.
“The government of Zimbabwe has
accorded national project status to the expansion project earmarked for
2019-2020.”
However, LCZL said the holding
group wanted government to stabilise electricity availability and resolve
foreign currency issues as these were key determinants to its expansion drive.
The announcement of the US$25
million capital injection comes as Lafarge Zimbabwe is “implementing measures
to improve plant reliability, creating and developing new business avenues
through product development and growing the franchise channel, building
stronger and more agile teams and restoring value through interventions such as
asset protection”.
The capital injection from
LafargeHolcim follows a loan facility of US$30 million to settle outstanding
foreign obligations in 2018, with the local subsidiary utilising US$24 million.
This was part of LCZL securing
external and local facilities of US$38,4 million last year.
LCZL said the purpose
of Gutovic’s visit “was to re-affirm the commitment of the LafargeHolcim
Group to invest in Zimbabwe given the macro-economic outlook under the
Transitional Stabilisation Programme”.
In 2018, LCZL reduced its capital
expenditure by 35,13% to US$2,4 million from the 2017 comparative of US$3,7
million.
LCZL expects measures it has
implemented to improve its growth following overturning its loss-making
position to register a profit after tax of US$1,33 million last year from a
loss of US$609 589 in the comparative 2017.
This gave LCZL a net profit
margin of 27,3% entering into the 2019 financial year. The performance left
LCZL with a current ratio of 2,15 indicating they could cover their liabilities
should they come due.
For 2019, Treasury expects demand to be driven by “road rehabilitation and construction, power generation expansion projects, dam construction, border posts redevelopment, expansion and rehabilitation of various water and sanitation projects and expansion, as well as modernisation of State universities”.
