Cement firm reports Sh68 million net loss

What you need to know:

  • “Despite the growing competitive environment, there are opportunities for growth to meet the increasing local and regional demand for cement,” the firm said in a statement in Monday.
  • Management expects price competition to dominate the current year, despite the huge cement demand in the country arising from major infrastructural projects by the government and the devolved units.
  • Management expects price competition to dominate the current year, despite the huge cement demand in the country arising from major infrastructural projects by the government and the devolved units.

East African Portland Cement sunk deeper into loss-making territory in the six months to December 2014, blaming the poor performance on a two-month shutdown of its packing and clinker units last year.

The firm closed down the two units for maintenance. The cement maker reported a net loss of Sh67.8 million in the period under review, down from a profit of Sh183 million the previous accounting period.

Total revenues fell 9.6 per cent to Sh4.1 billion on the backdrop of a decline in cement prices, while sales increased 8 per cent to Sh3.5 billion.

The management said the drop in cement prices had also played a big part in the dismal performance reported in the period, during which the firm posted a significant loss of market share to the competition.

COMPETITION

“Despite the growing competitive environment, there are opportunities for growth to meet the increasing local and regional demand for cement,” the firm said in a statement in Monday.

The listed firm was last year forced to cut its cement prices by five per cent to remain competitive following similar reductions by its rivals.

Portland’s operations have been frequently interrupted by boardroom wrangles between management, Lafarge and the government, in the recent past.

Management expects price competition to dominate the current year, despite the huge cement demand in the country arising from major infrastructural projects by the government and the devolved units.

“Production efficiency and cost control will remain at the heart of the company’s strategy and this should help respond to competition,” the firm said in an outlook statement.

It did not recommend a dividend, having not paid any to shareholders over a similar period last year.