Portland Cement issues profit warning on soaring costs, FX losses
Workers at the East African Portland Cement Company factory: The cement maker expects this year’s earning to drop by at least 25 per cent. PHOTO | FILE
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The firm's management said it also expected unrealized losses from its investment portfolio, underlining the harsh economic environment companies were operating in last year.
Listed cement maker East African Portland Cement has issued a profit warning after it sank deeper into loss owing to higher financing costs and forex losses.
EAPCC reported a net loss of Sh531 million for the half year ended December compared to an after tax loss of Sh65.3 million a year earlier.
“The forex loss together with the finance costs and tax credit amounted to Sh235 million compared to an overall net gain of Sh314 million in the previous period thereby resulting to an after tax loss of Sh531 million,” said EAPCC’s company secretary Sheila Kahuki in a statement.
The cement maker, whose last year’s twelve month performance was boosted by a one-off gain from sale of land, expects this year’s earning to drop by at least 25 per cent.
Management said it also expected unrealized losses from its investment portfolio, underlining the harsh economic environment companies were operating in last year.
Its financing costs increased by 50 per cent to Sh279 million which management attributed to increased use of debt to finance capital projects including the setting up of a third packing line to support higher sales volumes.
The firm’s sales revenues went up by 12 per cent to Sh4.6 billion from Sh4.1 billion following growth in sales volume by 16 per cent.
EAPCC recorded forex losses of Sh188 million compared to a gain of Sh233 million an year earlier attributed to weakening of the shilling against the dollar and Japanese yen.
The company also cut its administrative costs by three per cent in a restructuring process allowing its operating losses to shrink to Sh279 million from Sh399 million in December 2014.
