Khaya Cement (KHCL) Struggles in Full-Year Performance
Khaya Cement Limited (KHCL), the second-largest cement producer listed on the market, encountered significant setbacks during the recently reported full-year period. The company's board chairperson, Kumbirai Katsande, highlighted key factors contributing to the decline in performance.
Production Woes
Cement production volumes dropped by 15% due to a roof collapse incident at the cement mill. Additionally, the ramp-up after the commissioning of the VCM (Virtual Cement Mill) was slow, requiring thorough testing before optimal performance. Sales volumes followed the same trend, decreasing by 19% in line with production levels.
Exchange Losses Take a Toll
Exchange losses surged by a staggering 483%, significantly impacting profitability. These losses were a major driver behind the company's loss before tax, which amounted to ZWL 21.5 billion, compared to ZWL 1 billion in 2021.
Khaya Cement (KHCL) Struggles in Full-Year Performance
Challenges in Dry Mortars Business
Raw material shortages, including critical imported materials, affected the performance of the Dry Mortars business. Foreign currency shortages exacerbated the situation.
Capital Expansion and Cost Management
KHCL successfully completed its USD 25 million capital expansion program. The final phase involved commissioning the VCM in 2022, following the installation of alternative power infrastructure in 2020 and the automated Dry Mortars plant in 2021.
However, increased third-party and plant maintenance costs led to a drop in margins from 49.6% in the prior year to 31%.
Future
KHCL remains optimistic about its prospects. The company appreciates government and regulatory efforts to stabilize the macroeconomic environment and ensure the cement industry's viability.
ZIMRA Wants Delta Corporation to Pay Tax in Forex
In summary, while challenges persist, KHCL looks forward to improved performance in the coming period.
