Drop in revenues deepens Portland Cement net loss fourfold
Wednesday February 28 2018
Entrance of The East Africa Portland Cement Factory at Athi River, Kenya. The financially struggling cement maker saw its revenues drop by $6.5 million to $30.1 million for the six months to December 2017. FILE PHOTO | NATION
East African Portland Cement Company (EAPCC) has announced that its net loss for the six months to December has worsened nearly four times to Ksh969.6 million ($9.6 million) on lower revenues.
The financially struggling cement maker saw its revenues drop by Ksh660 million ($6.5 million) to Ksh3.06 billion ($30.1 million), with management attributing this drop to the politics-driven slowdown of the Kenyan economy last year.
Portland’s cost of sales dropped by five per cent to Ksh2.92 billion ($28.8 million), but management says these expenses would have been even less were it not for an increase in price of coal and electricity.
“Revenue declined by 18 per cent…due to slow market uptake on account of prolonged political activity which dampened investment decisions and thus slowed down economic activities,” EAPCC said in a statement on Wednesday.
“This was further impacted by the knock on effects of interest rates capping and prolonged drought on the general macro-economic environment.”
The firm, which has been hit by internal and external misappropriation, saw its administration and selling expenses drop by six per cent to Ksh1 billion (about $10 million) due to “ongoing cost management initiatives.”
Optimistic outlook
Portland’s management remains optimistic about the company’s future outlook, noting that the government’s push for affordable housing and a revamped manufacturing sector will benefit it.
EAPCC is exploring several major fundraising options to boost its financial health in an increasingly competitive regional cement business that has attracted more players.
These include selling part of its 14,000-acre idle land to the government.
Parastatal status
The company earlier told the Business Daily it could also concurrently launch a rights issue underwritten by development finance institutions (DFI), which could dilute Treasury's stake in the company, ending its status as a parastatal.
The twin fundraising strategies are expected to be implemented over the medium term and the money will be used to repay debt and invest in new plants and upgrade the existing factory.
“Given that the company has enormous resources in the form of idle and fully mined parcels of land, the Board expects to be granted the necessary approvals to generate value from these parcels,” the firm said Wednesday.