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Portland Cement loss up to Sh1.2bn in six months




Portland Cement loss up to Sh1.2bn in six months

Entrance to the East Africa Portland Cement factory in Athi River. FILE PHOTO | NMG 

East African Portland Cement Company (EAPCC) #ticker:PORT losses have widened by 30.7 percent to Sh1.26 billion in six months to December 2018 as revenues more than halved.

The loss, up from Sh969.5 million loss posted in a similar period in 2017, reverses the June 2018 full-year profit of Sh7.79 billion that came as a result of booking Sh11.34 billion gain on land revaluation.

In the half-year period, revenues fell by 55 per cent to Sh1.37 billion from Sh3.06 billion recorded in the previous period. This led to a 66 per cent rise in loss from operating activities to Sh1.4 billion.

The board said liquidity constraints affected the ability of the company to effectively supply cement to all its customers.

“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 EAPC working capital position,” said the firm.

The firm is stuck in negative working capital with obligations maturing within the next 12 months outstripping current assets by Sh7.3 billion.

This potentially makes it difficult for it to service such short term debts as well as meet other operational costs.

The board said it is aggressively pursuing balance sheet restructuring to address the situation. Finance costs have declined by 53 per cent to Sh204.7 million owing to the restructuring of some loans.

“Relevant consultations and approvals to recapitalise the business have been obtained,” says the board, which has for long been seeking government approval to sell its idle land.

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

Going forward, the EAPC expects the focus on cheap housing and manufacturing would trigger a competitive environment leading to subdued cement prices in the near future.