Portland cement revenue drops in stiff competition

Cement maker East Africa Portland Cement has recorded a 25% decline in revenue from Sh6.93 billion to Sh5.18 billion for the year ending June 2018.

The drop was attributed to an increase in competitive pressure and high cost of production which combined to reduced output in cement prices. However, while the cost of sales reduced by 14% to Sh5.27 billion on account of volume , their net profit went up to Sh7.79 billion down from a loss of Sh1.47 billion recorded last year.

This is due to 99% jump in fair value gain on investment property from Sh84.24 million to Sh11.34 billion. The rise has further pushed EAPC comprehensive income to Sh7.81 billion from a loss of Sh1.05 billion recorded within a similar period last year. Portland’s operating activities dipped further to Sh3.55 billion, a 63% drop from Sh1.32 billion spent last year. This was caused by a one off provision for the staff cost awarded by the Employment and Labour Relations Court.

The provision demanded implementation of the 2012-2015 CBA on rationalisation of salaries worth Sh1.5 billion. Total assets increased to Sh38.03 billion from Sh27.36 billion despite the liabilities exceeding its current assets by Sh6 billion. According to company secretary Sheila Kahuku, the cement maker has restructured its bank facilities to defray the strain on cash flow.

To grow its revenue, Portland is banking on the sale of a portion of of its 14,000-acre fully mined and idle land to raise funds to refinance the company. Until then, the firm has restructured its distribution channels for its products to place emphasis on company depots that avail EAPCC products directly to retail customers at competitive prices.

The Financial results were released on Friday 15, after a two weeks delay affecting investor confidence and revealing Portland’s battle with losses and management crisis.