Infrastructure focused companies position for growth
Zimbabwe Stock Exchange (ZSE) listed companies focused on infrastructure and housing construction services are increasingly investing in capacity to position themselves for improved market demand.
Their hopes are on a sustainable financing model for housing and government projects to increase activity in the sector resulting in improved profitability.
Lafarge Cement in its recent update said the overall market demand continues to grow driven by the individual home builders segment as well as the ongoing Government infrastructure projects.
“With demand rising from government infrastructure projects, mining and home builders, cement consumption has increased from under one million tonnes per year in 2017 to 1,4 million tonnes this year,” the company said.
Lafarge in 2020 began a US$25 million expansion programme and as part of the investment, in 2021, commissioned a new US$2,8 million dry mortar plant, which increased output of dry mortar products such as adhesives and agricultural lime from just 7,000 tonnes per year to 100,000 tonnes annually, equal to national demand.
Lafarge in its 2022 third quarter trading update said the new vertical cement mill (VCM) has since improved the company’s cement output and will see annual cement production capacity increase from 0,4 tonnes to 1,0 tonnes and improve raw material availability to the new DMO plant.
“This has positioned the company to take advantage of market growth with the increase in installed capacity.”
The group’s new shareholders, Fossil Mines, are also planning new investments to increase market share in the cement industry.
The acquisition transaction reportedly involves over 61 million shares at a negotiated price of US$29,7 million.
Holcim, Lafarge’s holding company, announced its exit from Zimbabwe in January, as part of a global selloff from several other markets and it announced in June that it had picked Fossil as its preferred bidder for Lafarge.
PPC Zimbabwe said following the resumption of clinker production at the end of May 2022, cement sales volumes improved in the second quarter of FY23 relative to the first quarter of FY23 with a continued robust cement demand from residential construction and government-funded infrastructure projects.
The group in the year carried out a planned kiln shutdown, required for maintenance and has since resumed production.
Earlier in the year, PPC Cement Zimbabwe announced a US$40 million solar power investment for its Bulawayo and Colleen Bawn plants to support the company’s energy requirements and help reduce gas supply in the country.
Construction firm Masimba Holdings said it has a firm diversified order book valued at USD145 million with tenures of between three months to eighteen months and the book is well balanced and diversified between public and private sectors.
“While the economic outlook is forecast to remain constrained, the current state of infrastructure development presents opportunities for the business in future.,” the company said.
Brick manufacturer, Willdale Limited says it is working to increase brand visibility through improved quality and diversified product mix.
Willdale manufactures and markets a range of clay brick products for the Zimbabwe building and construction sector.
Its clay brick range includes face brick, semi-face brick, common brick and paving bricks for walkways, patios, swimming pool surrounds and garden landscaping.
Chairman, Cleopas Makoni said the company is also looking to consolidate its market share, as a result, a new crushing plant which will improve product quality, will be installed in the new year.
“Further investments in capital expenditure are planned for the coming year to improve productivity and efficiency of both fixed and mobile plants,” he said.
Makoni said demand for bricks for housing and other infrastructure projects has remained high, driven by individual housing projects and government infrastructure projects.
In order to support infrastructure development trends in 2023, Finance and Economic Development Minister Mthuli Ncube in the 2023 national budget set aside $1,1 trillion support towards the 2023 development budget as it continues to prioritize infrastructure development which is key to unlocking sustainable economic growth and development.
Government is however concerned with malpractices in costing of projects and programmes which in some instances have been marred with future pricing and exorbitant pricing aimed at profiteering which has negatively affected the macroeconomic fundamentals.
These practices saw the Government in August 2022 taking a decision to suspend payments to contractors, government agencies and departments which it accused of active participation in the deteriorating exchange rate.-ebusinessweekly
