HARARE – Lafargeholcim regional head for Africa and the Middle East, Miljan Gutovic has flown into Zimbabwe for crucial talks with President Emmerson Mnangagwa’s government before pouring fresh capital to expand the firm’s operations in Zimbabwe, according to a highly placed executive with knowledge of the meeting.
The executive said Gutovic was due to meet Mnangagwa on Monday afternoon.
“Lafarge does not invest in any country without meeting its leaders to get assurances that their investment will be safe,” said the executive who spoke on condition of anonymity because he is not allowed to speak to the press.
“This is why Gutovic is here to meet President Emmerson Mnangagwa. Assessments for the establishment of a new plant have been completed and this is the last step towards rolling out the project,” the source said.
Gotovic sits in the Lafargeholcim global executive committee where he was appointed in July last year.
He reports to the global cement maker’s CEO, Jan Jenisch. No comment could immediately be obtained from Lafarge Zimbabwe.
The talks come as the Zimbabwe Stock Exchange listed Lafarge Zimbabwe said last week growth during the year to December 31, 2018 would be robust, driven by sharp spikes in demand for house construction.
This will add to an investor flight into the real estate sector, as the markets seek to hedge against hyperinflation induced shocks projected during the year, according to Lafarge chairman, Kumbirai Katsande.
A relentless surge in inflationary pressures since the second half of 2018 has unsettled a cross section of industries in the troubled southern African country.
But Zimbabwe’s second largest cement maker sees this flight to safety as a bedrock for its operations, and even sees itself emerging as the market leader at the end of 2019, toppling PPC Cement.
Katsande last week said in a commentary accompanying the firm’s financial results for the year ended December 31, 2018 that Lafarge had returned to the black during the period, posting $1,3 million in after tax profit, from a $609 000 loss during the prior comparable period.
Much of the recovery was underpinned by the return of demand in the aftermath of the ouster of Zimbabwe’s long-time ruler, Robert Mugabe in November 2017, which unlocked public sector opportunities in infrastructure rehabilitation and private sector-led housing construction.
Lafarge’s profit tracked revenue, which climbed by 24 percent to $72,3 million during the review period, from $58,4 million during the same period in 2017 after significant price adjustments in the final quarter.
Lafarge also rolled out a strategy to concentrate on high quality cement.
Revenue was boosted by the consolidation of its regional network, according to Katsande.
“Revenue was up by 24 percent of prior year due to the better average selling price achieved following price adjustments in the last quarter of the year and a favourable product mix skewed in favour of high strength cements,” Katsande said. “The business expanded its distribution footprint into the regional markets. Management believes that demand for cement will continue to be firm in 2019 as housing remains the only stable investment to unlock value against inflation. As such, the business will focus on improving profitability in the anticipation of closing the year strong and in the lead. This will be done by 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,” Katsande noted.