HomeBusinessGovt project props up Circle Cement

Govt project props up Circle Cement

CIRCLE Cement’s volumes for the financial year ending December 31, 2005 increased by 22%, buoyed by firming demand by government to support its housing projects under Operation Garikai.

“Sales volumes grew by 22% compared

to 2004. The group’s historical turnover increased by 297% to $620,2 billion,” said the company in a statement accompanying its financial results.

“Cement prices remained stable for the first half of the year in response to the relatively stable environment,” added the company.

The first six months saw a more stable exchange rate and declining inflation.

In contrast, the second half of the year was characterised by a sharp depreciation of the local currency and rising inflation, with the annual inflation rate increasing from 164,3% in June to 585,5% at the end of December 2005.

The financial period saw input costs increasing significantly on the back of fuel shortages and a depreciating local currency.

The company also had to move coal by road from Hwange at a significantly higher cost as the National Railways of Zimbabwe did not have diesel due to the shortage of foreign currency.

“Cement demand was firm in the second and third quarters, buoyed by the government’s housing projects under the auspices of Operation Garikai/Hlalani Kuhle,” Circle Cement said.

The revaluation of the company’s foreign currency denominated liabilities resulted in translated losses of $308 billion, as the exchange rate devalued by over 1 300% during the year under review.

Consequently, the historical loss attributable to shareholders was $53,5 billion compared to a profit of $25,2 billion in 2004.

Basic losses of $668,40 per share were incurred compared to last year’s $315,10.

Going forward, the group said demand is expected to remain firm, driven mainly by the housing sector, infrastructure rehabilitation and mining projects.

“Focus for 2006 will be on the quarrying operations to ensure adequate and good quality limestone supplies. We will also continue to focus on the plant integrity and foreign currency generation through increased exports,” Circle Cement said. — Staff Writer.

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