East African Portland return to profitability

By James Anyanzwa

East African Portland Portland Cement Company (EAPCC) recorded a net profit of Sh2.48 billion for the full year ended June 30, 2013.

 This is a major turnaround from the previous year’s loss of Sh969.7 million.

The cement maker attributed the remarkable performance, which represents a 356 per cent improvement to improved sales and cost-cutting measures and revaluation of assets.

Managing Director Kephar Tande said revenues grew eight per cent to Sh9.2 billion, while the cost sales dropped by Sh500 million, doubling the company’s profit margin from 13 per cent recorded in 2012 to 25 per cent in the year under review.

This was also felt in other profit indicators such as profit after tax, which went up to Sh1.8 billion, up from Sh973 million recorded in the previous year. Profit before taxation was Sh1.4 billion against a loss of Sh1 billion the prior year.

“Due to sustained marketing campaigns and improved supply of cement to the market, turnover grew, while cost of sales reduced due to stringent cost management and rationalization of operational activities,” Tande told reporters in Nairobi yesterday. Mr. Tande said the results were also lifted in huge party by tax credit of Sh356 million, which arose from write-back of initially provisioned tax expenses that did not materialise in the period under review.

 Also, the company made a gain of Sh595 million from the strengthening shilling and improved performance of its hedging strategy.

“Our growth strategy has paid off,” he said. “Our market has improved from 14 percent in 2012 to 20 percent at the end of June,” he said.

Tande said the cement market is getting more competitive and EAPCC was positioning itself to grow its market share through deeper market penetration in counties and increased reach in exports destinations of Uganda, South Sudan and Northern Tanzania.

He said they were banking on increased infrastructure projects in the country to lift demand.

He appealed to the government to remove duty exemption on imported cement meant for government projects.  “As local manufacturers, we are unable to compete for government projects because of this tax exemption,” he said.

Tande said the company plans to invest Sh500 million in plant and equipment improvement in the current year to boost production and efficiency.