Cement maker East African Portland Cement (EAPCC) has reported a net loss of Sh2.77 billion for the year ending June 30, 2020.
The earnings, however, showed an improvement compared to a loss of Sh3.36 billion in the previous year, with the firm saying cost containment helped it reduce expenses.
The company also attributed the decline in fortunes to growing competition. “Revenue for the year declined by 13 per cent owing to the increased competition that created a downward pressure on retail prices,” the firm said in a statement yesterday.
The firm, formed by Blue Circle Industries United Kingdom and incorporated in Kenya in 1933, also saw its asset base reduce from Sh36.54 billion in 2019 to Sh36.18 billion this year.
Equity dipped by slightly under Sh3 billion, from Sh21.5 billion to Sh18.25 billion in the period. Revenue for the year stood at Sh2.47 billion, down from 2019’s Sh2.85 billion.
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The company, which has been facing financial headwinds in the recent past, also slashed its workforce. “General operating expenses for the group and the company reduced by two per cent during the period owing to staff rationalisation and cost containment measures.
“Cost reductions are expected in future periods upon completion of the staff restructuring programmes. The attendant costs of the programmes were recognised in the current year.”
Earlier in the year, EAPCC asked all its employees to apply for voluntary early retirement in a measure aimed at turning around the cement maker.
With the onset of Covid-19, the local cement industry witnessed a decline in productivity, resulting in depressed revenues and manpower utilisation. This consequently led to unprecedented job losses.
In a memo to staff, Acting Managing Director Stephen Nthei (pictured) said the programme was a one-time event, and would be open to all employees, noting that applications were expected to start between May 28 and June 15.
The move was expected to lower costs after EAPCC had laid off extra employees under the ongoing staff rationalisation programme. The affected were in excess of 500 workers.
In August last year, the firm announced plans to lay off its workers due to financial problems. In the last three years, the company’s market share drastically reduced, affecting negatively on sales and profitability, and thus kicking up overheads.
So much was the damage that towards the end of 2018, the firm announced that it needed at least Sh15 billion to avoid a complete shutdown of its operations.
The firm had sunk into a Sh10.8 billion debt, with its biggest creditor being Kenya Commercial Bank (KCB), which it owed Sh4.5 billion.
In March last year, the then Industrialisation Cabinet Secretary Peter Munya said the government had already started laying the groundwork for the revival of the company, including the change of management and modernising its ageing plant in Athi River.
He said the cement manufacturer, which had at the time indicated that it required at least Sh15 billion to stay afloat, had the potential to stand on its feet again if it gets the said cash injection.
Following a dismal financial performance, the directors have not recommended payment of dividend.