EA Portland in red as loss widens to Sh1.2 billion

East African Portland Cement premise in Athi River, Nairobi (PHOTO: Standard)

NAIROBI, KENYA: Trouble at the East African Portland Cement continues to widen with the cement maker reporting a Sh1.2 billion loss in half-year financial results ended December 31 2018 compared to Sh970 million recorded similar period previous year.

The company on Wednesday attributed the loss to a difficult business environment, sluggish market and production challenges.

“The first half of the year reflected a difficult business environment on the backdrop of increased input prices, a sluggish market as well as production challenges arising from a tight working capital position. This affected our ability to effectively provide the product sufficiently to customers,” Sheila Kahuki, EA Portland Cement company secretary said.

During the period under review, the company’s sales revenue decline by 55 per cent over the same period in the prior year leading to an increase of 66 per cent in loss from operating activities.

Finance costs declined by 53 per cent owing to restructuring of finance facilities. The current liabilities exceed current assets by Sh7.3 billion.

The company is banking on President Uhuru Kenyatta’s Big Four Agenda to make money.

“Future market outlook remains positive with the unveiling of the Big Four Agenda by the National Government where affordable housing and manufacturing are among the top priorities. The competitive environment is expected to result in subdued cement prices in the near future,” she said.

The producer of Blue Triangle brand, which has largely been missing in retail outlets is however optimistic that it will continue to reap from reductions in administrative expenses due to the ongoing staff rationalisation and outsourcing of non-core administrative services.

The company’s secretary further applauded the government for its continued support in helping the company remain afloat.

“Despite the depressed results, the board remains confident in realisation of its turnaround efforts and takes cognisance of government support in concretising initiatives for working capital” She said.

Late last year, Cabinet approved the sale of 900 acres of land belonging to the cash-strapped company to Kenya Railway to fund its activities.

The company’s books have deteriorated rapidly over the past one year with the auditor general Edward Ouko saying last year that the firm cannot pay its debts.