Modupe Gbadeyanka
By Modupe Gbadeyanka
**Anticipates Slow Down in Growth Momentum
The management of Lafarge Africa Plc has said it expects the growth momentum witnessed in the cement industry in Nigeria lately to slow down this year.
The company said this anticipated decline will be caused by the coronavirus pandemic the globe is battling with at the moment. The virus has made many sectors to be on a standstill.
However, Lafarge Africa said it is mapping out strategies to ensure a minimal impact on its business in the 2020 financial year.
One of the key ways the firm said it considering is the implementation of its cost optimisation initiatives, which proved effective in the 2019 fiscal year.
Last year, the company cut down its administrative expenses 29.3 percent to N17.6 billion from N24.9 billion in 2018, due to a significant reduction in the directors’ costs to N35.5 million from N176.0 million, insurance from N331.2 million to N6.8 million, other supplies & spare parts from N1.0 billion to N156.9 million, rent from N836.2 million to N62.5 million, consultancy fees from N3.1 billion to N847.9 million, repair and maintenance from n736.8 million to N17.9 million, security cost from N414.7 million to N187.8 million, and travel from N875.7 million to N591.1 million.
Also, technical service fees were pruned to N3.9 billion from N6.3 billion and according to the note given by the company, Lafarge Africa is in the process of finalising a technical service agreement with Holcim Technology Limited, a related party which relates to Industrial Franchise.
This agreement, according to the cement firm, is awaiting registration with the National Office for Technology Acquisition and Promotion (NOTAP) in Nigeria and the provision is computed as 5 percent of Earnings before interest and tax (EBITDA) for both group and company subject to maximum of 2 percent of net sales.
Lafarge Africa promised to maintain these cost optimisation initiatives for a better 2020 despite the anticipated negative impact of the virus in the global space.
“As the Coronavirus (COVID-19) pandemic now impacts Nigeria, Lafarge Africa has taken the necessary measures to protect the health of its employees, customers, suppliers and other stakeholders.
“The construction sector and construction sites are generally more resilient than other sectors and Lafarge Africa has a strengthened balance sheet and is well equipped to weather the storm.
“However, we are closely monitoring the evolving situation and the impact of the COVID-19 pandemic on the Nigerian market.
“The Nigerian cement industry growth momentum is expected to slow down in FY 2020 compared to 2019 on the back of the COVID-19 pandemic and the challenging global macro-economic environment.
“We have launched an action plan Health, Cost & Cash and will continue to focus on the implementation of our cost optimisation initiatives during this period to minimise the impact on the business,” the company stated.
In the 2019 financial year, Lafarge Africa recorded a turnaround, which the CCEO, Khaled El Dokani, attributed to “cost-reduction strategy and the divestment of the South African business.”
El Dokani noted that, “The decrease in net debt has significantly strengthened our balance sheet and has placed us in a vantage position to face the future.”
