Zimbabwe: Plant Mishap, Covid-19 Drive Lafarge Into Loss

Lafarge Cement Zimbabwe recorded a $695 million loss in the trading period to December 2021 operations from a $5 billion profit in the same period last year.

The cement maker was weighed down by the negative impact of disruptions from the roof collapse at its cement mills and the adverse effect of the Covid-19 pandemic.

This led to a 21 percent decline in 2021 volume uptake and a subsequent loss before tax of $364 million from the $3,2 billion profit in the prior comparable period last year.

The collapse of the mill plant halted operations between October 2021 and mid-February this year, which adversely impacted the availability of its products on the market.

Covid-induced lockdowns meant Lafarge encountered challenges in the form of disruptions of disrupted work routines, social structures and disturbance of supply chains and operations.

Resultantly, the cement concern’s revenue retreated by 35 percent to close the year at $7,2 billion, a 35 percent decline from $11,1 billion in the same period in 2020.

However, there was a 19 percent volume growth in the dry mortar segment compared to the prior-year performance due to strong demand following the commissioning of the new automated dry mortar plant earlier.

The company’s operations in the course of the period were also sustained by clinker sales.

“The combination of the Covid-19 induced slowdown and the roof collapse resulted in volumes declining for the year by 21 percent from the prior year as a result of the poor industrial performance which was mainly attributable to the roof collapse incident.

“Despite the cost containment efforts, the poor industrial performance and the ensuing decline in volumes weighed down the overall performance of the company to a loss before tax of $364 million,” said Lafarge chairman Mr Kumbirai Katsande in a statement accompanying Lafarge’s full-year financials to December 2021.

Mr Katsande said the second half of the year provided a relaxed economic environment, which saw a modest improvement in business activity owing to the gradual re-opening of the economy, albeit under strict public health protocols.

In order to sustain the company’s key operations during the challenging times, Lafarge contracted gross long-term borrowings of $3,6 billion for the year under review.

Going forward the cement manufacturing company has hinted at proceeding with its US$25 million three-pronged investment plan which saw the installation of alternative power infrastructure in 2020.

In 2021 the company successfully completed and commissioned the automated dry mortar plant, which leaves the company with the Vertical Cement Mill project as the only outstanding capital project.

“The final investment project under the investment plan is the installation of the Vertical Cement Mill (VCM), earmarked to double cement milling capacity,” said Mr Katsande.

In line with compliance to environmental regulations Lafarge indicated that it subscribes to the NetZero Pledge to reduce carbon emissions by 2030 as part of the Holcim Group global commitment.

“There is no letting up on continuous improvement to reduce dust emissions and other environmental impacts,” he said.