By Prince Njagu.
PPC Zimbabwe and Lafarge cement are battling for dominance in Zimbabwe’s construction industry by engaging in plant upgrades and new product launches.
As indicated by Lafarge cement Chief Executive Officer AmalTantawi on the launch of the groups “SupaSet” product in June; the company’s market share stood at 40% and the liquidity crunch was not directly affecting their sales but was negatively impacting on payment for supplies through their credit facility.
The remaining 60% is shared between PPC Zimbabwe and the Gweru based; Sino-Zimbabwe cement.
A source within the Lafarge Marketing Division who asked for anonymity said; “Its business as usual for our firm and launch of “SupaSet” is only a way to meet market demands; sales are steady.”
Lafarge cement the Harare based cement producer; has made strides to keep its market dominance by launching the “SupaSet” product in June.
The Bulawayo bound PPC Zimbabwe countered the competition from its rival by launching the “Surebuild” 42.5 barely three months after the launch of “SupaSet”.
“We launched a new product last month; “Surebuild” 42.5 which is set to replace our OPC and our target market are concrete and brick makers,” said PPC Zimbabwe General Manager: Sales and Marketing Roger Steyn.
With Lafarge’s “building better Cities” campaign already in full swing the company projects that 70% of the world population will be living in urban areas by 2050 and so demand for cement was likely to boom regardless of the liquidity crunch.
Through this forecast both cement manufacturers have launched new products into the market and have engaged in heavy industrial upgrades; with PPC Zimbabwe embarking in the construction of a new plant near Harare.
PPC Zimbabwe has begun to seek out regional markets as its new clinker production facility near Harare is set to be commissioned in 2016.
The cement mill would cost PPC Zimbabwe $80 million and the target market of this plant would be Mozambique and the Harare market.
Mrs Tantawi had indicated that Lafarge was also considering setting up a new clinkering plant as the company was in a bid to position itself ahead of an anticipated economic recovery and an upsurge in demand.
Tantawi made it clear that Lafarge had plans to invest in a $250 million new plant development project in the country as part of their long term projects.
In its half year results, Lafargesaid cement sales volume for the period to the end of June declined by 12% and this has been attributed to softening demand from its traditional markets.
Revenues for the period declined 12.5% to USD 28.2 million while gross profit declined from USD 14.1 million to USD 9.4 million.
Lafarge recorded a gross profit of USD 9.4 million compared to USD 14.1 million in the same period in 2013.
The second half of the year has always been better in terms of business growth, and Lafarge expects the trend to continue this year as the company is well positioned to take advantage of the expected growth in the construction sector.
Both companies indicated plans to target outside markets.
“In our business we are not talking of an economic meltdown, we are going forward and our sales are even better than they were last year during the similar period… our sales are better than ever; sales have been on the rise since 2009,” said Steyn.
In a time frame of less than three months both companies have launched super-fast setting cement; Lafarge “SupaSet” and PPC Zimbabwe “Surebuild” 42.5 products ‘coincidently’ target the concrete and brick makers industry.
An independent economic analyst in the mining sector said; “The prevailing economic conditions in the country have resulted in most construction activities coming to a halt and a slackening in cement demand”
The economist revealed that the two cement companies may be only looking to position their companies in a better marketing position in terms of market dominance.