Athi River Mining to cut losses with disposal of fertiliser plant

Trans Nzoia county governor patrick Khaemba handing over a bag of Mavuno fertilizer to a woman in makutano,Cherangany.The non-acidic fertilizer has helped the county increase maize production by 30 per cent. 20.04.2015 Photo by Jacob Ngetich.

Athi River Mining (ARM) will exit all its non-cement manufacturing business by the end of this year.

The firm said it had already identified a strategic investor to take up its fertiliser business – Mavuno Fertilisers – by the third quarter of this year.

“In order to remain focused on the cement business, and to raise cash and release a significant amount of working capital locked in Mavuno Fertilisers, the board has decided to exit all of its non-cement businesses,” said the firm in a statement.

The revelation was made as ARM announced an after-tax loss of Sh2.8 billion in the financial year ending December 2016 against a Sh2.9 billion loss in 2015.

In audited results contained in the statement, ARM also registered a drop in revenue, raking in Sh13.8 billion in 2016 compared to Sh14.7 billion recorded in 2015.

Total assets stagnated at Sh51 billion because there was no investment in capital projects.

The company blamed the loss on the poor operating conditions in Tanzania where it has a major subsidiary.

“The operating conditions in 2016 were similar to 2015 in many respects, particularly due to business challenges in Tanzania. The company’s cash flow was also strained due to a high debt burden,” said the statement signed by Company Secretary RR Vora.

Debt was reduced in October 2016 only by way of a new equity injection of Sh14.1 billion from the UK-owned development institution CDC Group, which was used to retire some of its liabilities.

Overall turnover for 2016 was also 13 per cent lower than in the previous year, due to increased competition and lower cement sales in the Tanzanian market.

“The Tanzania business environment continued to worsen during the year. While electricity supply normalised in comparison to 2015, the Tanzania government ban on importation of coal, in favour of local procurement, increased our manufacturing costs,” said ARM.

The coal importation ban also had a negative impact on utilisation of the 4,000-tonne-per-day clinker plant in Tanga because of chronic under-supply.

 

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