Listed construction firms bullish on prospects

The Herald

Nelson Gahadza

Zimbabwe Stock Exchange (ZSE) listed companies involved in infrastructure and housing construction sectors are increasingly investing in capacity to position themselves for improved market demand.

The companies have their hopes anchored growing appetite for individual housing and Government infrastructure projects to drive activity in the sector and improve profitability.

Lafarge Cement, in its recent update, said the overall market demand continued 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.

In 2020 Lafarge 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, enough to meet the national demand.

In its 2022 third-quarter trading update, Lafarge said the new vertical cement mill (VCM) has since improved the company’s cement output and would significantly increase annual cement production capacity.

“This has positioned the company to take advantage of market growth with the increase in installed capacity.

The group’s new shareholder, Fossil Mines Zimbabwe, is 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 the financial year 2023 relative to the first quarter of the trading period amid sustained continued robust cement demand from residential construction and government-funded infrastructure projects.

During the year, the group carried out a planned kiln shutdown, which was necessary 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 (Gwanda) 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 and diversified order book valued at US$145 million with tenures of between three months to eighteen months. It said the book was well-balanced, spread 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 said it was 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 was 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.

Mr Makoni said demand for bricks for housing and other infrastructure projects 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 prioritise infrastructure development which is key to unlocking sustainable economic growth and development.

The 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.

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