http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.15Change: -0.05
R/$ = 11.65Change: -0.10
Au 1283.66 $/ozChange: 10.51
Pt 1240.50 $/ozChange: 12.30
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 25, 2012

Lafarge SA challenged by rising costs, cheap imports, says CEO

Back
Construction|Africa|Aggregate|Cement|Concrete|Diesel|Lafarge|Lafarge SA|Lafarge South Africa|Water|Africa|Europe|North America|India|Nigeria|Pakistan|South Africa|Lichtenburg Plant|New Year's Day|Aggregate Supplier|Cement|Cement Industry|Cement Input Costs|Electricity|Energy|Energy Efficiency|Imported Cement|Local Cement|Maintenance|Product|Products|Infrastructure|Thierry Legrand|Water|Diesel
Construction|Africa|Aggregate|Cement|Concrete|Diesel|Lafarge|Water|Africa|||||Energy|Maintenance|Products|Infrastructure|Water|
construction|africa-company|aggregate|cement-company|concrete|diesel-company|lafarge|lafarge-sa|lafarge-south-africa|water-company|africa|europe|north-america|india|nigeria|pakistan|south-africa|lichtenburg-plant|new-years-day|aggregate-supplier|cement|cement-industry|cement-input-costs|electricity|energy|energy-efficiency|imported-cement|local-cement|maintenance|product|products|infrastructure|thierry-legrand|water|diesel
© Reuse this



Local cement, concrete and aggregate supplier Lafarge South Africa (Lafarge SA) was facing "tremendous cost increases", said CEO Thierry Legrand on Wednesday.

With electricity and diesel price increases at double digits this year, Lafarge SA’s total cement input costs were 8% higher than in 2011 – well above the inflation rate. Legrand said the company was unable to compensate for these cost jumps through price adjustments on a similar level.

Another challenge was growing sales of cheap imported cement, specifically from India and Pakistan, landing up at small, sell-all shops in many of the country’s coastal regions. Consumers using this cement were often in the low-cost, DIY market.

Legrand said much of this cement was substandard, with some 50 kg bags also not holding the promised weight.

“This is clearly a concern. It is not good for the cement industry.”

Legrand said Lafarge SA had brought the matter to the attention of the National Regulator for Compulsory Specifications. It was also “looking at” whether the importation of this cement could be considered dumping, and whether further action should be taken.

“We want a level playing field,” noted Legrand.

He added that local cement makers, creating jobs while beneficiating limestone to its fullest, should not be disadvantaged should a carbon dioxide (CO2) tax come into effect.

“We want fair competition,” he emphasised.

Legrand estimated that 500 000 t of cement was imported into South Africa in 2011.

“A significant amount of that was not of good quality.”

Another challenge for Lafarge SA was that it would have to carry its share of an €1.3-billion cost-saving programme announced by its parent company for the 2012 to 2015 period.

Legrand did not want to commit to a number on how this would affect the company, saying only Lafarge SA was expected to contribute “at the level of its size”, noting that it added about 3% to yearly group turnover.

Legrand said there were no retrenchments planned for the local group, even though there had been around 60 job losses at the Lichtenburg plant in 2010, with 10% of this voluntary.

He believed the group could rather cut costs through improving efficiencies. Lafarge SA could, for example, use alternative fuels at its plants to achieve energy efficiency. It was also possible to rather use more electricity during cheaper, off-peak periods.

CEMENT MARKET TO GROW MODESTLY
Cement sales in South Africa was up 6.7% in the first quarter of 2012 compared with the same period last year, said Legrand.

“This is good growth, but a little bit disappointing.”

The second half of 2011 had spurred hopes of greater growth for the new year.

However, Legrand now expected to see the local cement market grow by between 4% and 5% in 2012 compared with 2011.

There was growth in the retail market, he said, with the construction and ready-mix markets flat. The residential market was seeing “a little bit more momentum”, with this trend to be aided by the recent interest rate cut. Legrand said Lafarge SA was not counting on government’s big infrastructure push “this year, or [in] the first half of 2013”.

Legrand did not want to forecast when there would be an upswing in the market.

“Today I see the interest rate go in the right direction, but I see clouds over Europe. I don’t want to be too wise, as I’ll be wrong.”

NEW FOCUS FOR LAFARGE
The global Lafarge group was currently focused on growing sales, cash generation and return on capital, rather than the geographical expansion seen earlier in its life cycle, said Legrand.

The focus was also on innovation that would see competitors stalled in coming up with similar products. One such product was HydroMedia, or “leaky” concrete, which allowed water to penetrate the concrete, entering the soil below. This product could, for example, reduce the costs and long-term maintenance of storm water infrastructure.

Lafarge had also shifted its focus to developing countries, with the Africa and Middle East cluster – at 22.5% – now responsible for most of the company’s sales, and no longer Europe and North America.

“These days it is better to have a strong position in countries such as Nigeria,” said Legrand.




 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
SAA acting CEO Nico Bezuidenhout, Finance Minister Nhlanhla Nene and SAA chairperson Dudu Myeni
Finance Minister Nhlanhla Nene has assured that loss-making national carrier South African Airlines (SAA) will not receive another bailout from government, noting that the most recent R6.4-billion government guarantee had only been provided in support of an intensive...
South Africa's cumulative trade deficit was R95.3-billion in 2014, the South African Revenue Service (Sars) said on Friday. In 2013, it was R71.4-billion, Sars said in a statement.
Certain regulatory approvals remain outstanding in Telkom’s proposed R2.67-billion takeover of JSE-listed Business Connexion (BCX), the parties said in an update to shareholders on Friday. BCX noted in the statement that the Competition Authority of Botswana had...
More
 
 
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
 
 
 
 
 
This Week's Magazine
The international Square Kilometre Array (SKA) radio telescope – which is to be jointly hosted by South Africa and Australia with, later, outstations in other countries – may not yet exist, but international scientific working groups are already deciding what...
A free Web-based solar power plant capacity-planning tool offers project planners and developers, as well as governments, a means to assess the solar energy potential of thin-film solar PV power over an area of land. The tool was developed by thin-film solar...
As yet, no specific methodology, timeline or costs have been finalised to remedy the water ingress, excessive to contractual specifications, into the Gautrain tunnel between emergency shaft two (E2) and Park Station, says Bombela Concession Company technical and...
ASTRAPAK The group highlighted that executive strategic interventions and other group-wide business improvement imperatives were progressing favourably
The “seriously disruptive” electricity outages in South Africa have cost packaging group Astrapak more than R2-million in “irrecoverable downtime costs”, the company said on Monday, adding that the power cuts were negating some of the benefit of energy saving...
Bakkies and more affordable cars dominated South Africa’s new vehicle market in 2014. Unaudited data from the Department of Trade and Industry (DTI) shows that South Africa’s most popular vehicle in 2014 was the Toyota Hilux, selling 37 562 units.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks