Cement firm sales volumes grow by 38 percent despite challenges

LISTED cement manufacturer Khayyam Cement Limited says it is uniquely positioned to support Government-driven initiatives in the agricultural sector through its Dry Mortar Products.

In its trading update for the period January 1, 2023 to December 31, 2023, the firm said the dry motor product sales volumes grew by 153 percent above the same period last year.

Company Secretary and Legal Advisor, Mr Arnold Chikazhe, noted that growth in dry mortar products was partly driven by the strong demand for the agricultural lime range Supagrow in the Government co-ordinated agriculture programme, Pfumvudza, which absorbed 33,7kt of the product during the period under review.

“Encouraging signs are being observed in the individual household sector and Government-funded infrastructure projects.

“There are also high hopes of the Government continuing to be heavily involved in growing the local agricultural sector in line with the milestones set in Vision 2030.

“The Company is uniquely positioned to support these Government-driven initiatives through its Dry Mortar Products, which include agricultural lime,” he said.

Turning to the cement business unit, the firm’s industrial performance increased with the installation of the Vertical Cement Mill in Q3 of 2022.

Cement sales volumes therefore closed 34 percent above the same period in the prior year.

Production performance was largely negatively impacted by power quality challenges as well as equipment breakdowns, particularly at the kiln.

Mr Chikazhe said one of the positive spin-offs of the short-term rapid impact plan was to grow bulk cement volume contribution which increased from one percent in the prior year to four percent in the period under review.

“This growth is also in line with the Company’s strategy of penetrating the bulk cement market.

“Clinker production volumes though declined by 21 percent mainly due to the mothballing of the kiln in the last half of the year.”

He added that the need to regulate cement imports, bring inflation under control, address the electricity shortages and improve the state of the global economy are likely to dominate the Company’s performance for the year 2024.

In the period under review, the cement firm experienced a number of costly breakdowns of the kiln largely caused by the three-year postponement of the kiln maintenance shutdown due to working capital constraints.

As a result, a strategic decision was taken to mothball the plant during the last quarter of 2023 and focus on a grinding station model while the kiln is being repaired.

“A total of 1 000 hours were lost as a result of the unplanned breakdowns which in turn impacted negatively on both clinker, cement production and sales volumes and with it profits and cash generation.”

The firm further noted that it continues to face unfair competition from cheaper cement imports and this has impacted the general market preference of products due to pricing which further disadvantages local players.

“However, the Government’s efforts to protect the local industry from imports are highly commendable and appreciated. Despite these challenges, the Company managed to grow sales volumes by 38 percent across the board.”-chroicle