The cement industry in South Africa has increasingly become competitive while in the rest of the African market, Dangote Cement, PPC, Lafarge, Bamburi and Twiga Cement are seen consolidating their markets. Chinese investors have also been rushing to put up operations in markets such as Zimbabwe, where PPC and Lafarge already compete.
But experts at Exotix Capital say there is a “lack of sufficient visibility on the South African business” by Lafarge Africa. They add that Lafarge Africa “continues to struggle amid a tougher operating environment and internal operating challenges”.
In September last year, Lafarge Africa appointed Rossen Papazov as new country manager for South Africa, hoping that his experience “will be invaluable in guiding the company to address the challenges it faces in the highly competitive” industry.
Experts believe this has been difficult to achieve, hence sentiments that Lafarge SA will be put up for sale this year.
“Our view is that Lafarge Africa could channel proceeds from any potential sale of Lafarge South Africa Holdings towards stabilising and de-risking the Nigeria business, particularly as Lafarge South Africa faces headwinds from a weak operating environment and intensifying competitive pressures,” Exotix Capital said in a research note.
Lafarge has, however, not made an announcement about the sale of its South African unit. Other executives in the sub-Saharan Africa cement business told Business Report that they were not ruling out any mergers and acquisitions in the industry, including the top companies in Africa, although they said they were not privy to information about Lafarge Africa’s future.