Lafarge Jordan Cement Reports Losses in 2011
Inflation of energy costs could be offset as a result of the use of other fuels.
Lafarge Jordan Cement's 2011 annual results showed a net operating loss of JD 4 million compared to a net operating profit of JD 17.7 million in 2010. This loss is mainly due to the continuous increase in fuel and electricity prices, strong competition, as well as the burden of fixed administrative and operation expenses.
Competition in the local market has been steadily on the rise, especially with the entrance of yet a new competitor last year. In the Jordanian market, many competitors enjoy considerably lower operating expenses as a result of their use of cheaper other fuels. Within this context, the Company highlighted the importance of creating a fair competitive environment for all companies in the field and the necessity of using other fuels, and especially coal, to allow the Company to mitigate the high costs of energy.
The Company affirmed that the use of coal is the main condition for competitively producing cement in light of increasing fuel prices. Lafarge Jordan Cement received government approval from the Ministry of Environment for grinding coal in Fuheis over six months ago. The use of coal would allow the Company to responsibly continue its duties to its employees and the local community, which would in turn positively impact the local market.
Lafarge Jordan Cement's CEO, Toufic Tabbara, explained: "Lafarge Jordan Cement is in an unprecedented financial situation and actions must be implemented to ensure long-term sustainability. We are confident that the support of the government and all other stakeholders will enable us to start grinding coal in Fuheis according to various safety and precaution measures".
Lafarge Jordan Cement's financial results showed a net loss of JD 20.5 million. As a result, the Company registered an impairment loss of JD 13 million representing the reduction in its machinery and equipment to its recoverable value in accordance with International Financial Reporting Standards.
During its meeting held on February 12th, 2012, the Company's Board of Directors recommended to the General Assembly to not distribute dividends in light of the challenges that the Company is facing and its unprecedented financial situation. The Company's General Assembly meeting to endorse the Company's financial statements and its annual report will be held on Wednesday, April 25th, 2012.