Cement firms record steady decline in fortunes

Cement manufacturers in East Africa are staring at
dwindling sales, rising operational costs and plummeting incomes this year,
industry data shows.

In what has now become predictable, Kenya’s East African
Portland Cement has yet again issued a profit warning, preparing shareholders
for another year of loss-making.

The company, which is located outside the Kenyan
capital Nairobi, said preliminary evaluation of the unaudited results for the
period to December 31, 2018 had showed that full-year earnings would fall by
more than 25% compared with the year ended June 30, 2018.

“The expected decrease is mainly attributable to
increased input costs, a sluggish market as well as production challenges
arising from a tight working capital position that affected the company’s
ability to effectively serve its customers,” the board said in a statement.

Cheaper imports

Portland joins Bamburi, majority owned by the
French giant Lafarge, which issued a profit warning in December, informing
shareholders and potential investors that 2018 full-year earnings would decline
by more than 25%. The audited results are expected later this month.

Africa’s largest cement manufacturer, Dangote, said
its Pan-African operations have produced mixed fortunes having posted flat
sales growth in 2018 led by Tanzania and Ethiopia which reported a decrease in
sales.

Dangote’s cement sales volumes in Tanzania declined
from 757,000 tonnes in 2017 to 625,000 tonnes in 2018 only a few years after it
entered the East African market with high level optimism.

The decline was attributed to long delays in
installation of gas turbines at its Mtwara plant, that forced Dangote to reduce
production to avoid substantial losses arising from use of expensive diesel
generators to power the plant.

Tanzanian government had at the time imposed a ban
on coal imports, demanding that local manufacturers procure locally-produced
coal to power their plants.

Cement manufacturers are also being forced to battle for market share with cheaper imports from China, India and Pakistan.https://www.theeastafrican.co.ke/business/Cement-firms-record-steady-decline-in-fortunes/2560-5025838-5bx6w2z/index.html