Listed Kenya cement firm eyes bond

October 8, 2009
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, NAIROBI, Kenya, Oct 8 – East African Portland Cement Company (EAPCC) has now interest to launch a convertible bond into the market.

Although still at the design stage, EAPCC Managing Director John Nyambok said they intend to use the proceeds to finance hedge funds for a Sh1.7 billion loan from Japan.

“We have repaid a lot of money, but it’s like chasing the wind because the Yen has been appreciating against the shilling and every time you repay a certain amount the balance in Kenya shilling also goes up,” Mr Nyambok explained.

The loan has been attributed to the dip in profitability for the listed company due to the foreign exchange losses accruing from the Japanese loan.

“Come the next financial year this loan will not appear on our balance sheets and we can start posting real profits,” he added.

Going forward the company has embarked on a number of cost cutting measures, in its drive to increase its market share in the region. Mr Nyambok said plans were at an advance stage to switch the factory to coal generated power by 2010.

“We project the installation works to be complete latest April and therefore switch from heavy fuel oil.”

He said they anticipate a 30 percent reduction in cost of production for a tonne of cement which he hopes will boost competitiveness as the company aims to become a low cost producer of cement in the region.

To further capitalise on the growing demand for cement, EAPCC says it is looking at value addition of its products.

“We are thinking along the lines of ready mix (cement, aggregate and sand ready for construction) which would be a great way of increasing our market share not only in Kenya but in the region,” he said.

He was speaking during the opening of EAPCC corporate headquarters in Nairobi’s Upper Hill area, which has been shifted from the Athi River plant.

EAPCC chairman Mark ole Karbolo said the move was necessitated by increased demand for cement in the Nairobi region. Mr Karbolo said being closer to the market would revamp sales of the company as well as expand its market share in the Kenya and the region.

“Being in town we will be nearer to many customers who find our Athi river head quarter and road a bit of a bother,” he said.

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