East African Portland Cement Company has issued a profit warning for the year ending June 30, following a Sh528 million net loss for the half year period to December 2015.
The listed cement maker made a Sh67.8 million loss in the half year period during the previous year. The amount of loss was less compared to this year’s performance following injection of Sh226.5 million from sale of company’s land.
During the period under review, finance costs shot up by 50 per cent to Sh279.7 million due to increased uptake of loans to finance projects, including a third cement packaging line.
The company also suffered a foreign exchange loss of Sh187.6 million compared to a gain of Sh233 million earned during the previous year on account of weakening of the shilling against the dollar and the Japanese Yen during the period under review.
Revenue grew slightly from Sh4.1 billion to Sh4.6 billion. The company is banking on the expected expansion in the real estate sector and growth in the number of infrastructure projects to turnaround its fortunes.
“Production efficiencies and cost control will therefore remain key pillars of the company’s performance supported by growth in volumes. In this regard therefore, the company is restructuring its operations including debt restructuring to reduce the high finance and administrative costs,” said Portland’s company secretary Sheila Kahuki in a statement.
In 2014, the cement company was faced with a series of boardroom wrangles pitting the state and Lafarge, a French conglomerate that controls 41.7 per cent of Portland’s shares.