Displaying items by tag: Lafarge South Africa

Zimbabwe: Lafarge Zimbabwe’s chief executive officer (CEO) Siame Kaulule has left the company for a new role with LafargeHolcim in South Africa, according to the NewsDay newspaper. Kaulule was appointed as the head of LafargeHolcim’s Zimbabwe operations in early 2019. He succeeded Amal Naiel, who spent five years in the post.

South Africa: The Competition Tribunal has resumed hearings into allegations of cartel-like behaviour by Natal Portland Cement (NPC), Pretoria Portland Cement Company (PPC), Lafarge Industries South Africa (Lafarge) and AfriSam Consortium (AfriSam). It follows a referral by the Competition Commission following an investigation in 2015 that examined collusive conduct between the cement companies between 2008 and 2012. At the time PPC was granted conditional leniency and AfriSam and Lafarge settled with the Commission.

Lesotho: Lafarge South Africa and Lephema Executive Group have launched a cement plant project, Maloti Mountain Cement. Thesele Maseribane, Minister of Communications, attended the ceremony with representatives of Lafarge South Africa, according to the Informative newspaper. Although reported at an ‘initial stage’ of development, the project has hired 150 employees.

Nigerian financial analysts Cordros Securities concluded this week that the merger of some of Lafarge’s Sub-Saharan African businesses had reduced earnings at Lafarge Africa. The report is interesting because it explicitly points out a situation where the consolidation of some of Lafarge’s various companies have failed in the wake of the formation of LafargeHolcim.

Cordros Securities’ criticism is that Nigeria’s Lafarge WAPCO performed better in 2013 alone before it became part of Lafarge Africa, with a higher standalone earnings before interest, taxation, depreciation and amortisation (EBITDA) margin. Lafarge Africa formed in 2014, a year before the LafargeHolcim merger was completed, through the consolidation of Lafarge South Africa, United Cement Company of Nigeria, Ashakacem and Atlas Cement into Lafarge WAPCO. Since the formation of Lafarge Africa, Cordros maintains that its earnings per share have consistently fallen, its share price has dropped, its debt has risen, its margins have decreased and its sales volumes of cement have also withered.

Cordros mainly focuses on the Nigerian parts of Lafarge Africa’s business, given its interest in that market and the fact that about three quarters of the company is based in the country. It blames the current situation on growing operating costs since the merger, skyrocketing financing costs for debts and efficiency issues. In Nigeria, Lafarge Africa has had to cope with disruptions to gas supplies. Nigeria’s Dangote Cement had similar problems domestically in 2017 with falling cement sales volumes in a market reeling from an economic recession but Cordros reckoned that Dangote is picking up market share in the South West due to an ‘aggressive retail penetration’ strategy. Finally, Lafarge Africa faced a US$9m impairment in 2017 due to its abandoned pre-heater upgrade project at AshakaCem. The project has been suspended since 2009 due to security concerns in the North-East region. The plant faced an attack by the Boko Haram militant group in 2014 and the group has seemed reluctant to invest further in the site subsequently.

Cordros’ final word on the matter is that with the Nigerian cement market performing slower than it has previously, the local market has become a battleground between the established players of Dangote Cement, BUA Group and Lafarge Africa. What little the report does have on South Africa covers problems with old and inefficient hardware, labour disputes, low prices due to weak demand, high competition and a negative product mix.

Lafarge Africa itself presents a more mixed picture, with market growth picking up in Nigeria following end of the recession but continued market problems in South Africa. Overall, its reported sales grew by 4.8% to US$448m in the first half of 2018 but its EBITDA fell by 25% to US$76.4m. Overall cement sales volumes were reported as up by 5.4% to 2.6Mt in the first half but volumes were still falling in South Africa in the second quarter.

Part of the backdrop to all of this is the intention of Lafarge Africa to cut its debt. In May 2018 its chairman Mobolaji Balogun said that the company wanted to cut its debts by 2020 before continuing with its expansion programme. Part of this process will include a new rights issue later in 2018 to allow shareholders to buy stock at a discount.

It must have made sense, on paper at least, to merge the Lafarge subsidiaries in the two largest economies in Sub-Saharan Africa. Once the merger had settled in, with synergies generating extra revenue, the group could have considered adding extra territories such as Kenya. However, it’s not turned out like that. Two recessions in Nigeria and South Africa respectively, old equipment, debt and serious competition from locally owned producers have piled on the pressure instead. From a stockholder perspective, Cordros is not impressed by the performance of Lafarge Africa. The wider question is: what else did Lafarge and Holcim get wrong when they joined to form LafargeHolcim?

Nigeria: Financial analysts Cordros Securities have blamed falling earnings at Lafarge Africa on the merger of its Nigerian businesses with Lafarge South Africa. In a research report the analysts found that the merger increased operating costs and reduced shareholder value, according to the Vanguard newspaper. Lafarge WAPCO’s earnings per share, earnings before interest, taxation, depreciation and amortisation (EBITDA) and profit before tax have all fallen since 2013. It also found that operating costs had increased ‘significantly’ following the merger, debt had risen and that earnings had also been hit by efficiency issues.

Lafarge announced plants to merge its businesses in Nigeria and South Africa in 2014. The move saw the consolidation of Lafarge South Africa, United Cement Company of Nigeria, Ashakacem and Atlas Cement to Lafarge WAPCO. It was subsequently renamed Lafarge Africa.

South Africa: Lafarge South Africa has appointed Rossen Papazov as its country chief executive officer (CEO). Papazov will join the company with effect from 1 October 2017, according to Business Report. He has been the country head for Holcim in Azerbaijan for the last four years. Prior to this he originally joined Holcim in 2000 as its Business Development Manager for Bulgaria. He has also held roles in Belgium and Romania.

South Africa: Lafarge South Africa has dismissed around 200 employees from some of the company's sites, including its cement plant in Lichtenburg, following several ‘illegal’ work stoppages in the past few weeks. The workers were issued with letters of dismissal on 8 July 2016 after they ignored two written ultimatums to return to work, according to Lafarge. The workers had ‘illegally’ downed tools, to demand the reinstatement of the National Union of Mineworkers' (NUM) National Full Time Shop Steward, who has been suspended for contravening company policy.

"Management regrets having had to issue the notices of dismissal, but we were left with no other choice. We had exhausted all avenues, including giving the employees ample opportunity to return to work, as well as engaging the NUM head office. The workers repeatedly engaged in illegal work stoppages despite continued efforts to reach amicable solutions on outstanding issues," said Veli Gwamanda, Country Director for Human Resources. The official added that the company had also acted to protect non-striking workers from threats, harassment and in some cases physical assaults.

Disciplinary hearings started on 14 July 2016 and are expected to be concluded shortly. The company has implemented contingency plans and operations have not been affected.

South Africa: Striking Lafarge South Africa employees affiliated to the National Union of Mineworkers (NUM) have returned to work after a 12-day strike, according to Lafarge South Africa. The industrial action involved disputes on several issues, including a salary increase.

"We are pleased that we have been able to negotiate solutions that benefit our employees. While our operations were not grossly impacted, we are happy to announce that we are running at full capacity," said Unathi Batyashe-Fillis, Country Manager for Communications and Public Affairs at Lafarge South Africa.

Lafarge reported that an agreement had been reached on an 8% salary increase effective from 1 January 2016, a commitment to tighten salary gaps per job category by the end of April 2016 and a one-off fixed housing grant of US$4640 per employee to acquire or build a house. The grant would, after two years of implementation, be increased by a sum equal to the annual average inflationary rate for workers.

Around 800 NUM affiliated employees demanding initially a 13% raise and a US$3310 housing grant, according to Reuters. The union has confirmed that the deal has been accepted.

South Africa: LafargeHolcim has reported that the National Union of Mineworkers (NUM) has accepted an 8% pay increase, according to Reuters. Around 800 workers affiliated to the union started a strike on 11 February 2016 asking for an 8.5% wage increase, a US$6500 housing grant, salary adjustments and a 35% acting allowance, Lafarge said in a statement. It added that the company was ‘well placed’ to meet its customer’s orders. The industrial action followed a series of negotiations which started in October 2015.