NAIROBI, Kenya, Nov 17 – The East African Portland Cement Company (EAPCC) is set to lay off 1,500 employees as part of its turnaround strategy.
The cement maker, which has been posting losses for the last three years, will also sell land worth Sh8 billion in a bid shore up liquidity.
The firms’ Chairman Bill Lay has however denied reports that the company is insolvent.
“We don’t need a bail out by the government. Instead we are presenting a solution which requires minimum intervention that will turnaround the company and position it for growth,” Lay said in Nairobi, Thursday.
Also in the pipeline is a plan to close its plant in March 2017 for rehabilitation, with operations expected to continue from April.
“We need to have our cooler fixed. The restructuring including retrenchment will be in the next 90 days,” Lay said.
The firms’ full year operating losses increased 174 percent to Sh1.58 billion, being the second consecutive year for the company to publish its results late.
EAPCC’s operational efficiency continues to lag behind most of its competitors pointing to persistent weaker margins in a price sensitive over-supplied market.
In addition, perennial management wrangles and changes has remained a key challenge when it comes to strategy formulation and execution.
Earnings per share declined 42 percent to Sh46.06 while operating expenses went up by 24.4 per cent.
Total debt went up by 7.2per cent with notable increase in bank overdraft of 189 per cent.
The firm however grew its revenue by 5.4per cent, the first positive year on year growth since 2013.
Gross profit margin contracted to 17.9 per cent from 21.7 per cent in 2015.
Standard Investment Research Bank says with prices of key imports, fuel oil & clinker, remaining low, the margin squeeze highlights EAPCC’s operational inefficiencies.
“EAPCC’s operational efficiency continues to lag most of its competitors pointing to persistent weaker margins in a price sensitive over supplied market. In addition, perennial change in top management remains a key challenge when it comes to strategy formulation and execution,” Standard Investment Bank states.