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Quarterly sales disappointing – Lafarge SA

There were mixed signals in the building and construction sector and first-quarter growth in cement sales this year were disappointing, Thierry Legrand, the chief executive of Lafarge South Africa, said this week.

Cement sales figures released by the Cement & Concrete Institute (C&CI) showed that sales grew by 6.7 percent in the first quarter of this year compared with the corresponding quarter last year.

A production line of Arfisam at their factory in Roodepoort south of JHB.Photo: Leon Nicholas. Credit: INLSA

Legrand said this was “a little bit disappointing” because the growth rate was higher towards the end of last year and it had been expected that the higher growth in the second half of last year would continue into this year.

Cement sales were relatively low in the first quarter of last year and the growth stronger in the second half of the year.

Legrand said cement sales growth for the rest of this year was expected to be lower than the 6.7 percent in the first quarter. He anticipated growth of between 4 percent and 5 percent for the full year.

“It’s a recovery, which is good but not exactly what we were expecting,” he said.

Industry cement sales reached a peak of 13.5 million tons in 2008 and Lafarge SA was expecting industry sales of 12 million tons this year.

Legrand said the growth in cement sales was coming from the retail market, where volume sales were increasing. However, Legrand said this was a very competitive market with lower priced products being pushed strongly.

Legrand said the construction market was “rather flat” and there were mixed signals with civil engineers more optimistic than they had been, “but the order books of the construction companies are not that great”.

Some tenders had been issued for infrastructure projects and he expected some of them would be awarded soon.

“The big infrastructure programme announced by the president is still a great opportunity, but it’s not something we count on for this year and probably also not for the first half of next year.”

Legrand said in the residential market there was a bit more momentum on social housing, but there was little evidence of a strong recovery from the residential market and there were mixed signals.

Legrand confirmed that only two of the three kilns at Lafarge SA’s cement plant in Lichtenburg were operating.

The company’s French parent company plans to achieve savings of E1.3 billion (R13.3bn) over four years to 2015.

Legrand said Lafarge SA’s operations accounted for 3 percent of the group’s revenue but the company was not in a position to mention a cost saving figure for the local operations.

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