, NAIROBI, Kenya, Feb 25 – East African Portland Cement Company (EAPCC) has returned to profitability, recording a half year net profit of Sh327 million ending December last year compared to a net loss of Sh376 million in the previous period.
Managing Director Kephar Tande said the profit gains were due to stringent cost effective management efforts leading to an improvement in gross margins from 18 percent to 29.6 percent.
However revenue declined by 8 percent to Sh4.5 billion as a result of challenges experienced by the company last year which took longer to resolve, especially staff unrest in January 2012.
The unrest was fuelled by leadership woes that eventually led to the shutdown of operations.
In the last full financial year ending June 2012 the second largest cement company in the country registered a loss of Sh849.7 million compared with a Sh119.06 million loss for the same period previous year.
“One of the main things we were able to achieve during this half year is efficiency in our factory, producing clinker non-stop and being able to reach our targets. This meant that we did not need to buy any clinker and that meant that we saved a lot of money; Sh850million. This is where most of our profits have come from,” Tande said.
Earnings were also boosted by a forex gain of Sh145 million on its Yen-denominated loan, up from Sh74 million in the comparable period last year, as the shilling strengthened against the Yen.
Tande said the company has recovered its market share from 19 percent in July last year to the current 21 percent and targets to hit its pre-crisis level of 25 percent by the end of the current financial year.
“We have said we are going to become more competitive in terms of pricing strategies, distribute our products more effectively, go to all the counties in our depot structure and considering the improvement infrastructural development in our country, we will get our market share targets very quick,” the MD added.
The company has promised a dividend payout to shareholders by the end of second half of the year.
In the outlook, the company plans to venture into the Tanzanian market in the second half of the year after the country removed non-tariff barriers to trade.
Plans are also underway to implementing a five-year strategic plan (2013-2016), which includes upgrading its kiln to boost production by 150,000 tonnes per annum, a new packaging line to improve turnaround of trucks, acquiring more reserves in Kitui and Kajiado as well as purchasing a new clinker and construction of a new grinding mill. This is expected to boost its market to 37 percent by 2016.
The government holds a 25.3 percent stake in EAPCC while National Social Security Fund (NSSF) shareholding stands at 27 percent.
French conglomerate, Lafarge, holds a 41.7 percent stake while the remainder is held by the public through listing on the Nairobi Securities Exchange.