Portland pressures Adan to renew CEO’s term after Sh1.8 bn profit
East African Portland Cement Company chairman Mark ole Karbolo (left) and managing director Kepher Tande during the release of the company’s full y year report at a Nairobi Hotel on October 25, 2013 Photo/SALATON NJAU
What you need to know:
Cost cuts and rising sales helped firm recover from last year’s Sh972m loss.
The East Africa Portland Cement Company (EAPCC) board piled pressure on Industrialisation secretary Adan Mohamed on Friday after the firm returned to full-year profit, boosted by cost cutting and improved cement sales.
Portland, Kenya’s second-largest cement producer, posted a net profit of Sh1.77 billion for the year to June.
The East Africa Portland Cement Company (EAPCC) board piled pressure on Industrialisation secretary Adan Mohamed on Friday after the firm returned to full-year profit, boosted by cost cutting and improved cement sales.
Portland, Kenya’s second-largest cement producer, posted a net profit of Sh1.77 billion for the year to June compared to a loss of Sh972 million in the same period a year earlier.
This saw the cement maker declare a dividend at Sh0.75, which is a boon to shareholders who have seen the value of their stocks appreciate 18.75 per cent over the past three months to Sh66.50 a share.
The results have buoyed the board of Portland Cement and Friday renewed calls for Mr Mohamed to renew the term of chief executive Kephar Tande, whose initial three-year term is coming to a close on November 16.
The board of the cement firm advised Mr Mohamed on September 16 to renew the term, but senior officials in the ministry have been pushing for a review of the board’s August 8 decision that offered Mr Tande a new term and asked the CEO to step down.
“I’d like to commend the MD for a job well done. His ability has been demonstrated in the strategy he has implemented to turn around the company and that’s why we want him to serve another term,” said Mark ole Karbolo, chairman of EAPCC board of directors.
“These are very impressive results and we are targeting infrastructure projects at the county level and the regional market to grow market share.”
The Athi River-based company said that sales increased 8.2 per cent to Sh9.2 billion from Sh8.5 billion last year, which it attributed to aggressive marketing and revamping its cement distribution network.
Construction sector has been one of East Africa’s fastest growing sectors over the last decade, fuelled by a burgeoning middle class with higher disposable incomes and the pouring of billions in real estate by high-net worth investors.
Returns on investment in the sector have outpaced those of equities and government securities.
But the two largest cement makers, Bamburi and Portland, have lost market shares to new entrants National Cement, makers of Simba brand, and to a larger extent Mombasa Cement who supply the Nyumba brand.
Mr Tande said the business boosted profit by more than half a billion shillings by reducing inefficiency at its plants, which led to greater production of clinker, a key raw material for making cement.
He added that the firm plans to spend Sh2.7 billion in the next two years to boost production and efficiency including building a new packaging line and diversify business.
Portland, which also operates in Uganda and South Sudan, plans to increase clinkers capacity to two million tonnes per year by 2015 from the less than one million and was exploring expanding to Tanzania.
The push and pull over the CEO’s term is a pointer that the government has not given up on its bid to have a new team shepherd Portland cement after a failed attempt to oust the directors including Mr Tande in December 2011.
