Long used to profit growth, Tanga Cement Company is now facing a decline and complains that cement imports as well as stiff competition in the market continued to have a negative impact on prices.

Although sales volumes increased by 16 per cent, revenue increased by only 8 per cent.

Tanga Cement chairman Charles Naude said results for the six months ended June 30 show that costs of sales increased mainly due to higher management costs and the use of expensive imported clinker during the maintenance closure in March and April.

Net profit after tax dropped by 20 per cent to Tsh10.3 billion ($7 million) from Tsh12.8 billion ($ 8.5 million) registered during the corresponding period last year.

This resulted in a drop in earnings per share from Tsh201 ($0.134) to Tsh161 ($0.107).

Mr Naude said that depreciation charges increased in 2010 due to the commissioning of the new cement mill towards the end of 2009.

Depreciation charges rose to Tsh2.7 billion ($1.8 million) from Tsh801 million ($534,244).

Cash generated from trading dropped from Tsh19.7 billion ($13.1 million) to Tsh17.3 billion ($11.5 million) during the period under review.

Unlike last year, the board has approved an interim dividend of 50 per cent of net profit after tax. This amounts to Tsh5.1 billion ($3.4 million) or Tsh80 ($0.053) per share.

However, Tanga Cement expects its profit to grow further in the second half of the year owing to increased capacity resulting from recent capital expenditure.

This will contribute to a reduction in production costs during the second half of the year.

Last year, Tanga cautioned investors that while it was taking steps to improve its market position, the company expected only a marginal improvement in results.