NAIROBI, Kenya, Oct 31 – The industrial unrest that paralysed operations at the East African Portland Cement Company (EAPCC) last December significantly contributed to a loss of Sh821 million for the year ended 30th June 2012, a pale comparison of the Sh1.7 million profit posted the previous year.
The cement firm said the wrangles fuelled by leadership woes that eventually led to the shutdown of operations in January this year, subsequently resulted in production losses and market share erosion during most of the second half.
Sales volumes and revenue declined by about 15 percent compared to the previous year, costing the company Sh1.5 billion in revenue losses.
The cost of imported coal shot up by Sh500 million, on the back of the depreciating shilling in the first half of the year under review, while power costs climbed to Sh912 million.
A breakdown of the kiln in November last year led to a costly shutdown, repairs and lost clinker production; this compounded with the reduction in sales largely contributed to the 48 percent decline in gross profit, the firm revealed.
Earnings per share dropped by Sh9.09, with the board of directors not recommending payment of a dividend.
The company is optimistic about its future outlook and recovery with the market now seeing interest rates come down, which it hopes will spur new growth in construction and drive up cement demand.
However the upcoming elections, the firm warned, could affect the anticipated recovery going forward.
The cement industry remains competitive with new entrants in the local and export market including Mombasa Cement, National Cement and Savannah Cement.
Standard Investment Bank (SIB) said over the last five years, cement industry players have invested over Sh42 billion in capacity expansion.