, NAIROBI, Kenya, Mar 1 – Disruptive boardroom wrangles at the East African Portland Cement Company (EAPCC) took a toll on the company’s performance which suffered a net loss of Sh88 million for the first half of the year to December 2011.
Besides the dispute that was played out in the courts for the most part of December and January 2012, the poor performance was also blamed on a major plant breakdown in November 2011.
“Loss after tax in December 2011 was Sh175.4 million compared to a profit of S254.9 million in the same period in 2010. A tax credit in the period was Sh87 million bringing the total comprehensive loss to Sh88 million,” a statement of the cement producer’s financials showed.
The firm further cited increased competition which led to an eight percent reduction in sales volumes and consequently lower revenues of Sh4.9 billion against Sh5.2 billion registered in 2010.
At the same time, gross margins were also depressed by the high production costs.
“This was mainly contributed by the rising cost of electricity, packaging materials and the unfavourable movements in the foreign currency exchange rates,” the statement signed by company secretary John Maonga indicated.
These costs offset the savings made from the coal firing facility. As such, no interim dividend will be paid out.
The firm subsequently issued a profit warning for the full year to June 2012 citing intensified competition and the effect that staff unrest had on its operation. The cement producer was shut down for eight days leading to a loss of over Sh400 million.
“The board of directors expects that the company’s earnings for the year will be least 25 percent less than the level of earnings achieved in the previous year,” the firm said.
Despite these challenges however, EAPCC said it would continue to implement a recovery strategy to ensure its long term growth and stability.