NetOne to embark on 3rd phase of capital expansion project


Netone will soon embark on the third phase of its capital expansion project at a cost of nearly half a billion dollars, as it emerged it is finalising the second phase where it is investing $218 million. Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira said in a recent interview that NetOne would invest about $500 million in the third phase of the projects targeting latest broadband technology and increased rural coverage. In terms of Telecel Zimbabwe, the Government is rolling out an ambitious investment programme for the company after acquiring a controlling 60 percent stake previously held by Vimpelcom of Netherlands. Phase two, which had an initial completion deadline of September 2016 targeted 2 300 stations while an additional 3 000 would be constructed in 2017 under phase three of a $485 million investment. Phase two of the project saw NetOne having the widest fourth generation (4G) technology, Long Term Evolution, while the company is targeting doubling its subscriber base to 8 million by end of 2017. – Herald


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Externalisation probe begins


Finance and Economic Development Minister Patrick Chinamasa has said government has started investigations to identify individuals and companies involved in externalising foreign currency from Zimbabwe and in turn fuelling the current cash crisis. Zimbabwe is battling an acute cash shortage attributed to several factors chiefly externalisation and low exports. The country’s monetary authorities have introduced several measures to curb the cash shortage including closely monitoring the way some companies handle their cash following concerns that big firms, particularly retail businesses were not banking their daily takings. Chinamasa said externalisation continued to play a huge part in the cash challenges the country was facing. He encouraged wider use of plastic money and other forms of electronic payment as a substitute for cash. On the budget deficit, Minister Chinamasa denied any fiscal indiscipline on the part of Government. –   Herald


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A cautious cheer for OK after improved F17 performance

A cautious cheer for OK after improved F17 performance

HARARE – OK released an improved set of results for the financial year ended March 2017. Revenue went up by 8% while gross margins improved to 16.5% from 16.1% the previous year, Management attributed the increase in gross margins to an improvement in sales mix towards high margin products. Operating margins also had a positive outturn as a result, while profit after tax jumped 801% to $6.1 million following the revenue growth and margin improvements. As an icing on the cake, shareholders were awarded a 0.26cents per share in dividend, giving them a yield of around 4%. On overall, OK presented a pleasing picture turning around the sombre mood of the previous year.

Without argument, OK is one of the largest retail stores in Zimbabwe boasting of 63 branches on aggregate. Their wide distribution network has enabled them to capture markets across all demographic divides. It has also strengthened their brand over the years and consumers can associate with OK. In a performing economy, management can be able to push sales riding merely on brand equity. Weak financial results reported over the previous years has however been a rude awakening that in an environment like the current, giants can also plummet due to  market challenges. Consumers are still struggling due to low disposable income and volumes can go down even for goods previously deemed as basic. Low margin products, mark downs and promotions will take centre stage as businesses strategize to avert an otherwise disastrous fall in sales. Margins simultaneously take a knock in the process.

Noting such market difficulties, one would then prompt to ask what may have moved OK’s performance in financial year 2017. Is it a sustainable performance that calls for a toast, or would that be a premature celebration?  Performance can be dissected in parts, starting with revenue. During financial year 2017, the group closed 2 shops and added 3. On a net basis, the group had an additional store to contribute to revenue and thereby making up part of turnover growth over the year (ignoring square metre movements). A standardised measure could be the asset turnover which indicates that there was a marginal fall from 3.5 to 3.4 times in 2017. This means that the efficient utilisation of assets slightly dropped. Essentially, although the difference is immaterial, the company was able to generate more out of its assets in 2016 than it was able to in 2017.

Next, we could analyse the growth in margins. OK attributed its margin growth partly to a good sales mix. It has become rare to hear a testimony of an improved sales mix. Most consumers are substituting for cheap, thereby resulting in underperforming companies. The ability to sustain a favourable sales mix in the current economic situation is low. On the other hand, a fall in general prices, however, seems to have ceased. Inflation breached into positive territory in February 2017. Cost of doing business has been increased and this could be the attribute to the emerging inflation, which seems to be cost push inflation. Food retailers can price in the inflation in their merchandise, resulting in an increase rather than a decline in prices. Whether margins will grow, maintain or fall depends on how much of the inflation the retailer can pass on to the consumer. Considerations will be made that demand is still weak, and consumers will not be able to absorb steep price increases. Either, prices will not reflect the full changes in inflation or volumes will come down should prices edge too high. Whatever the scenario, margins are likely to fall.

Further headwinds await the business in the near future. The drop in foreign currency reserves pose a threat to the smooth stocking of the stores as most of their merchandise is imported. So far they have managed the situation well supported by their relationship with Kawena. This is of course a business relationship, and should OK fail to pay out their dues, this arrangement may fall away. Of course the risk of running out of stock lies with every importer.

While the results from OK were improved, the ability to sustain the performance remains doubtful. The major pull factor is the operating environment where various challenges are at the fore – weak demand, foreign currency shortages, rising inflation in an overall inelastic market – and OK, like most companies, are at the mercy of the economy. If OK can deliver a similar set of results come next year, then it is thumbs up to the management team. The anticipation unfortunately is that the deteriorating economy will persist and OK will be negatively affected.

Ariston Holdings interim revenue down 8% but eye recovery during the second half

Ariston Holdings interim revenue down 8% but eye recovery during the second half

HARARE – Ariston Holdings revenue for the half year ended 31 March 2017 was down 8.17% at $3.47mln y-o-y. The decline was mainly attributed to the late commencement of the macadamia harvesting.

The company however anticipates reversing the decline in the second half of the year. Group chief executive Paul Spear in a statement accompanying the results said due to the cyclical nature of the company’s agricultural model, the second half of the year represents the harvesting and selling season for the majority of the crops.

“So far indications are that the Group will have higher yields than prior year and pricing remains firm and the group has adequate export orders for the current season’s production,” he said.

The interim results also show that the group narrowed its loss from $2.1 mln to $1.9 mln. The Group’s Southdown Estates contributed 71% to company revenue compared to 75% in prior comparable period.  Claremont Estates contributed 20% to the Group’s revenue compared to 16% in 2016 while Kent Estates contribution at 9% remains unchanged from the prior comparative period.

Loss from operations for the period was at $1.4mln compared to $1.12mln while finance costs reduced to $0.71mln from $2.05mln as a result of the conversion of shareholder loans to equity in August 2016.

In terms of volume and operations, at Stone fruit, harvesting has been completed for the season and volumes improved to 943 tonnes from 776 tonnes achieved during the prior year. Average pricing was 13% below the comparative period as a result of disappointing export volumes.

Pome fruit harvesting is in progress and so far the volume is ahead of prior period with 709 tonnes already harvested compared to 543 tonnes in 2016. “Prices have been firm. The increase in yields for both stone fruit and pome fruit is the result of young orchards coming into production and quality has been good,” he said.

Passion fruit orchards continue to produce fruit at acceptable levels and pricing has however been 3% weaker than that of prior year. Avocado harvesting will commence in the third quarter.  With export forecasts positive, the crop is expected to be in line with expectations.

Annual crops for instance potato plantings were limited by the incessant rains, nonetheless production is up on the prior year. At Kent Estate commercial maize, seed maize and beans await harvesting in the third quarter.

Poultry continued to perform very well and utilisation of the second poultry site will commence after half year.

Tea production for the period was 1,392 tonnes, representing 18% increase on prior year. Spear said year-end production is expected to be comfortably ahead of prior year and the average tea export pricing improved 11% during the period. Sales of blended teas have been slightly ahead of prior year in terms of volumes produced and sold with improved margins being realized.

Spear said although late, the macadamia harvest for 2017 is set to surpass prior levels and the quality of the nuts harvested so far are has been the best. Average prices have also increased.

Our Thoughts 

The collapse of industry in Zimbabwe has provided a boon for South African companies, who have been making inroads into the country and snapping up ailing companies. In 2012 AFRIFRESH Group of South Africa increased its shareholding in Ariston to 61% after snapping up 21% of shares not taken by shareholders of the group after a rights issue. The company paid $0,009 per share and the shares were issued on the basis of two ordinary shares for every one such share already held in the company.  Effectively they acquired the company for a song and now they are set to reap high profits from their acquisition.  We believe that is the company is well poised to take advantage of opportunities in foreign markets.

Although the local avocado market faces stiff competition from local vendors as they offer the single-seeded berry at very low prices. The group has better prospects in the international markets which have seen a massive growth in avocado prices this year. Surging demand and decreased output form key producers in California, Peru and Mexico due to the drought in California and workers striking in Mexico, has resulted in the price for a 10kg box go up to £21.78 (double that of prior year). This trend is expected to hold for some time and Ariston should take advantage of this window of opportunity by increasing exports.

Kenya is one of the key tea producers in Africa, and output is expected to fall due to the low rainfall in Q1, this again presents an opportunity for Ariston to tap into regional markets given that their Blended Tea Factory has a fair share of 25% of the local tea market. In the last year, global tea prices have gone up by about 23% representing an almost five-year high.

The regional macadamia nut industry foresees increased production in the coming harvest period which could threaten Ariston’s current positive outlook.


Zim investment outflows up 50% to $33mln as FDI declines 24% in 2016

Zim investment outflows up 50% to $33mln as FDI declines 24% in 2016

HARARE – The country’s investment inflows declined last year to $319 million compared to $421 million in the prior year, according to the World Investment Report released this afternoon by United Nations Commission for Trade and Development. However, Zimbabwe’s investment outflows surged 50 percent to $33 million during the same period.

Business has been complaining that the country’s indigenisation laws are an albatross to investment inflows into the country.

Last month, Confederation of Zimbabwe Industries past president, Busisa Moyo, told FinX that: “The outstanding clarifications on indigenisation continue to be a stumbling block to investors even though  President Robert Mugabe made the clarifications 12 months ago and mandated Government and Parliament to align these laws.

There is still a fair amount of ambiguity around indigenisation and there is a dire need to present a seamless revised Act in line with the latest thinking in Government base on His Excellency’s Clarification in April 2016. Most investors have adopted a wait-and-see attitude or proceeded to invest in neighbouring countries and are equally awaiting with great anticipation a revised Act”.

The report noted that foreign direct investment flows to Africa continued to decline in 2016, by three percent to $59 billion and that the inflows remain unevenly distributed, with five countries (Angola, Egypt, Nigeria, Ghana and Ethiopia) accounting for 57 percent of the total.

“In Southern Africa, FDI inflows fell by 18 percent to $21.2 billion, as flows declined in eight of the ten countries in the sub-region. In Angola, FDI flows declined by 11 percent to $14.4 billion as reinvested earnings shrank. South Africa, the economic powerhouse of the continent, continued to underperform, with FDI at a paltry $2.3 billion, up 31 percent from 2015’s record low, but still well below its past average”, the report says. Botswana also recorded a significant drop, from $679 million in 2015 to $10 million last year. Mozambique recorded FDI inflows of $3.09 billion and Zambia $469 million.

It was also highlighted in the report that multinational enterprises (MNEs) from developed economies remained the largest investors in Africa, although investors from developing economies (such as China, India, and South Africa) are increasingly active. It further opined that African MNEs were also prominent in buying assets located in Africa.

“Barclay’s (United Kingdom), for example, sold its 150-year-old affiliate in Egypt to Morocco’s Attijariwafa Bank for $500 million. Liquid Telecom, owned by telecommunication company Econet Wireless (Zimbabwe), bought the South African fixed-line operator Neotel (majority owned by India’s Tata Communications) for $430 million, in a deal that will create the continent’s biggest broadband network”, the report says.

In terms of increases of foreign ownership ceilings in stock exchanges the report noted that Zimbabwe expanded foreign ownership limits, allowing foreign investors to own up to 49 percent of companies listed on the Zimbabwe Stock Exchange.

FDI inflows to Africa are expected to increase in 2017, to about $65 billion, in view of modest oil price rises and a potential upturn in non-oil FDI. The report says that growing regional integration should foster Africa’s competitive global integration and encourage stronger FDI flows.

The report further finds that 79 percent of the newly adopted investment policy measures in 2016 were aimed at investment liberalisation and promotion, while only 19 percent introduced new restrictions or regulations.

“The new investment restrictions or regulations introduced in 2016 largely reflect concerns about foreign ownership of strategic industries, national security and the competitiveness of local producers. These concerns manifest themselves not only in legislation but also in administrative decisions of host countries, particularly in the context of merger controls related to foreign takeovers”, says the report.

Meanwhile, global FDI is expected to rise by 5 percent, to almost $1.8 trillion in 2017, after retreating by 2 percent to $1.75 trillion last year.

“The new, more optimistic projections for 2017 are attributed to higher economic growth expectations across major regions, a resumption of growth in trade and a recovery in corporate profits. The modest increase in FDI flows is expected to continue into 2018, taking flows to $1.85 trillion. However, this still puts FDI below the all-time peak of $1.9 trillion in 2007”, the report says.

Industrials onslaught continues on select heavyweights

Industrials onslaught continues on select heavyweights

HARARE -The unrelenting stock-market bull run demands some respect as it has been on the rise for 10 consecutive weeks on the back of increased local demand and reduced foreign selling.

The gains in most stocks coupled by increased demand powered the Industrial index to 171.73 (+1.35 points). Outstanding gains for the day were in CFI (+8%), FBCH (+8%), Mash (13%) and Zimpapers (25%). Activity the Minings category improved albeit all counters trading flat. Falgold, Hwange and RioZim traded at 1c, 2.35c and 55c with 15,000, 6,781 and 68 shares exchanging hands respectively. The resources sector closed unchanged at 69.63 while turnover came in at $1,458,021

Econet, as has become the norm over the past weeks carried the day with 1,555,356 shares exchanging hands at 36.50c (+0.5c). Lafarge also joined the party, the French headquartered cement producer added 0.05c to trade at 40c with 1,581,764 shares changing hands. Lafarge, chief executive officer, Amil Tantawi yesterday highlighted how the firm’s revenue was down 15% as at March 2017 mainly due to the incessant rains season that weighed down demand for their product.

She however added that the cement producer’s revenues have been on the rebound since April with demand expected to increase in the second quarter.

Axia reversed yesterday’s losses and traded 0.10c in the green at 8.70c with 109,031 changing hands. Bankers, Barclays and CBZ traded flat at 3.40c and 9.54c with 118,000 and 1,972 shares changing hands respectively. While FBC added 1c to close at 13c with 5,960 shares changing hands. Fidelity traded flat at 11.50c with 939,871 shares changing hands.

CFI continued to march in the positive, the Agro concern notched up 1.13c to trade at 14.18c with 69,304 shares changing hands. The counter closed higher at 14.25c with increased demand. Colcom traded 2c firmer at 40c with 3,546 shares changing hands. The meat processer is set to be delisted from the ZSE. Delta traded 0.63c firmer at 100.65c with 11,270 shares exchanging hands. The counter closed lower at 101c.

Hippo added 0.25c to close at 55.50c with 171,438 shares changing hands. Meikles traded 0.95c stronger at 26c with only 5000 shares exchanging hands. Old Mutual continued to rally, the Insurance giant inched up 0.43c to trade at 377.43c.

The counter closed higher at 380c on the back of increased demand for the stock. Padenga who are up 33.13% year to date added a further 0.05 to close at 21.30c with 9,592 shares changing hands. Mashonaland Holdings added 0.21c to close at 2.01c with 57,307 shares changing hands. Zimpapers traded 0.25c firmer at 1c with 63,918 shares changing hands

Although most counters recorded gains a few stocks traded in the red. Seedco reversed yesterday’s gains and lost 0.34c to close at 101c with 1,776 shares changing hands ahead of its results briefing on Thursday. Simbisa was down 0.01c at 18c with a mere 1,230 shares changing hands. Star Africa traded 0.02c weaker at 1.18c with 86,400 shares changing hands.

Zimra surpasses May revenue targets on improved operational efficiency

Zimra surpasses May revenue targets on improved operational efficiency

HARARE – Zimbabwe Revenue Authority has surpassed gross and net revenue collections for May due to various enhancement measures it is pursuing although it remains to be seen whether the improved flow is stable and long lasting.

In a statement, Zimra said revenue targets for May were surpassed by 17% at gross and 11% at net due to intensified audits and enforcement activities, improvements in operational efficiency, and client engagement initiatives that are being undertaken to enhance revenue collections. Gross revenue collections for May amounted to $307.3 million against a target of $262.21 million, while net collections after refunds were at $290.68 million.

Zimra also surpassed the cumulative target of   $1.338 billion for the period 1 January to 31 May 2017 after gross and net collections amounted to $1.428 billion and $1.364 billion respectively. Year-to-date gross and net collections as at 31 May 2017 were, therefore, 7% and 2% above the target respectively.

In Q1, Zimra exceeded  target after gross collections amounted to  $862.47 million and net collections stood at $826.63 million, against a target of $812.94 million.

Acting commissioner general Happias Kuzvinzwa said: “The sterling performance was attributed to a battery of revenue enhancement measures implemented by the Authority, which include automation, greater enforcement, the fight against corruption and the rolling out of the electronic cargo tracking system.”

Corporate Income Tax collections were $35.08 million against a target of $9.90 million, resulting in a positive variance of 254%. During the period under review collections under this revenue head rose by over 460 % from   $6.26 million attained same period last year.

Gross collections from VAT on Local Sales amounted to $63.12 million exceeding the target of $55.6 million by 14%.  VAT refunds for the month of May 2017 amounted to $16.5 milliom, resulting in net collections of  $46.5 million while net VAT collections were, 16% below the target. However, the revenue head (net collections) grew by 19% from $39.05 million that was collected in May 2016.

Collections from VAT on Imports for the month of May 2017 were $37.39 mln,  which is 31 %  above the targeted $28.50million Revenue collections under this revenue head rose by 32 % compared to $28.2millionrealised   same period last year. “The positive performance of the revenue head can be attributed to an increase in foreign currency allocations to banks by the Reserve Bank of Zimbabwe to meet critical foreign payments.” said Kunzvinzwa

Customs Duty gross collections for the period amounted to $24.98million against a target of  $23.5mln, resulting in a positive variance of  6%.  Net collections at $24.88 million were  5%  above the target of $23.59 million .

Customs Duty refunds for the month amounted to $94,7 million while net collections rose 14% compared to  $21.86 million collected in May 2016.  Collections under Excise Duty were two per cent above target. An increase of 12% on exercise duty collections which stood ta   $57.34 million was achieved  against target of   $56.2million,a performance attributed to  an increase in volumes of imported fuel and the introduction of Excise Duty on paraffin.

“Paying taxes and customs duties on time and in full is a sign of patriotism and contributes to the economic development of our beautiful nation. I, therefore, urge our compliant clients to continue paying their taxes to build and dignify Zimbabwe. I wish to encourage people who are not paying their taxes to start playing their part in building the country,” said Kuzvinzwa.

Nicoz Diamond’s GPW up 1% to $15.7 mln in four months to April

Nicoz Diamond’s GPW up 1% to $15.7 mln in four months to April 

HARARE- Nicoz Diamond Insurance’s revenue for the four months to April 2017 grew a marginal 1% with Gross Premium Written (GWP) for the period at $15.7mln compared to $15.6mln reported in the same period last year.

Group managing director Grace Muradzikwa giving a trading update at the company’ s annual general meeting said the group’s revenue remained resilient despite a number of challenges facing the economy.

“The insurance industry continues to face a protracted soft market cycle that has seen clients continuing to negotiate for reduced covers and lower premium rates. This is further exacerbated by the extended payment terms being negotiated,” she said.

According to Muradzikwa, operating cash flow for April was positive, as a result, GWP as at May 2017 is up 11% at $19.5mln from the 2016 figure.

Muradzikwa said while the likely outturn for 2017 cannot be committed to with certainty, efforts will be made towards sustaining profitability achieved in FY16.

“The short term focus is to consolidate and strengthen the position of the company on the local market and we have support of the now largest shareholder NSSA to make it possible,” she said.

In terms of claims experience, the company had a favorable loss experience of 43% during the first quarter of 2017 as risk management initiatives  implemented stated bearing fruits. This compares favorably with a loss ratio of 46% in April 2016 and an International benchmark of 60%.

During the period, claims amounting to $2.7mln were paid and Muradzikwa said this was done with ease given the company’s stringent liquidity management processes.

Expense ratios were down to 31% compared to 32% in April 2016 as the company heavily focuses on expense management.

“Even though some regulatory and related changes made in 2016 increased the cost of doing business for the sector and the company in particular, we did all we could to ensure that expenses remain aligned to revenue and this shall continue to be an area of focus,” Muradzikwa said.

In an environment with incessant liquidity problems, premium collection has remained a challenge and to facilitate ease of payments the company had deployed point of sale machines throughout its branches nationwide as well as put in place mobile transfer options.

She said the company had also upgraded its ICT system and harnessing it as a crucial business enabler bringing efficient and convenient service to customers.

“We are doing everything possible to safeguard and sweat all our investment assets. Even though money market rates and property returns are currently depressed, the recent run in the Stock Market is encouraging,” she said.

The company is obtaining good rental yields from the completed phase of Diamond Villas. The final phase of the project was completed in 2016 but leasing was delayed by the connection of key utilities.’

“The units are now expected to be fully leased out from July 1, 2017. Additionally, the company has put the disposal of the units on hold to maximise on rental returns while preserving value until the market conditions present lucrative opportunities to dispose.

In the region, Diamond General Zambia and UGI Malawi traded profitably in the 4 months but Diamond Seguros Mozambique is still in negative territory.

Muradzikwa said all the three regional markets are still volatile and characterised by high inflation and exchange rate depreciation.

She said the company will, going forward, ensure that UGI Malawi contributes positively in 2017 while for Diamond Seguros Mozambique and Diamond General Zambia will be capitalised with the companies at various stages of potential investor engagements.

At the AGM directors and audit fees were approved at $82 220 and $97 472 respectively.

ZSE continues to rally as demand for blue chips increases

ZSE continues to rally as demand for blue chips increases

HARARE- The local bourse continued to perform very well on the back of elevated demand across all sectors as fund managers rebalance their portfolios towards safer investments on the market.

Econet and Seedco carried the day as demand from local investors remains firm.  Econet added 1c to trade at 36c with 3,006,099 shares changing hands and closed at 36.25c. The counter remains one of the most sought after stock on the bourse. Seedco added 0.34 shares to trade at 101.34c with 1,001,274 shares changing hands, the counter closed lower at 101c.

Demand for Agro concern, CFI has remained firm, the stock traded 1c lower at 13.05c with 6,875,493 shares changing hands. The company is on a recovery path evidenced by revenue for the  half year  ended 31 March 2017 increasing  30,1%  to  $24,9 mln compared to  $ 19,1mln in prior half year on the back of  a good 2016/7 agricultural season and good performance by horticultural and property development.

Outside of these three huge trades, activity remained elevated. Other counters to record gains were Afdis which traded 1c firmer at 61c with 15,471 shares of the bottlers exchanging hands. BATZ was 38.10c in the black at 1,703.10c with only 121 shares trading.

Delta notched up 2.02c to close at 100.02c and closed at 100.25c. Hippo inched up by 3c to close at 55.25c with a mere 79 shares changing hands. Innscor remained firm, adding 0.79c with 1,052 shares trading . OKZim traded 0.36c firmer at 7.86c with 16,850 shares changing hands and closed lower at 7.44c.

Barclays traded flat at 3.40c with 302,945 shares changing hands. On Friday 02 June Barclays Bank PLC (BBPLC) announced the sale of its majority shareholding in Barclays Bank of Zimbabwe Limited (BBZ) to FMB Capital Holdings PLC (FMBCH). Completion of this transaction is subject to regulatory approvals, and is currently expected to conclude by the end of the third quarter (Q3) 2017.

The Industrial index continued to stride in the positive, the mainstream index was up a commendable 2.40 points to close at 170.38 on the back of most counters trading in the green. Activity remains very constrained on the Minings category were only 15,000 Bindura shares exchanged hands at a flat price of 3c.

The resources sector closed flat at 69.63. Turnover was a praiseworthy $3,062,493 mainly driven by the block trades in Econet and Seedco

Lafarge’s revenue for Q1 down 15% as heavy rains weigh

Lafarge’s revenue for Q1 down 15%  as heavy rains weigh

HARARE- Cement producer, Lafarge’s revenue was down 15% as at March 2017 compared to the same period last year. The decline was mainly due to the incessant rains season that weighed down demand for their product.

Lafarge, chief executive officer, Amil Tantawi however said the cement producer’s revenues have been on the rebound since April with demand expected to increase in the second quarter.

“When I look at the figures of March, we were down 15% compared to the figures of last year. The good news is we started picking up when the rains stopped. When we look at April and May results things are looking good,” Tantawi said during an interview after the company’s annual general meeting earlier today.
Incessant rains experienced during the first quarter of this year according to Tantawi stalled various projects resulting in low turnover.

“To be honest the market has been down. When we look at the first quarter, we estimate that the overall market was down by 23% that is the overall market. We had a more than expected rainy season and of cause the cash crisis. So we anticipate that the market was down 23 percent.”

Lafarge, according to Tantawi was operating within budget, with the cement producer is expected to pursue a robust growth strategy.

“If I look at the first quarter were even better that last year. So I think we will finish the year with the budget that we have but we have a budget that is in line with the anticipated growth,” Tantawi added.

Lafarge like most net importers of raw material and spare parts has not been spared by foreign payments backlog as its current liabilities grew by 50% to $34,95m as at December 31,2016.

With foreign payments softening after intervention from the African Development Bank (AFDB), the cement producer would be looking at capitalising on last year’s success.

However the 2017 operating environment for the French headquartered cement producer could be characterised by stiff competition in the wake of Pretoria Portland Cement (PPC) commissioning a cement plant early this year, posing a challenge to other competition in the Northen Region.