East African Portland Cement Plc has declared its first dividend since 2011 after returning to profitability, posting a net profit of Sh1 billion in the year to June 2024.
The cement maker's board has recommended the payment of the first and final dividend, totalling Sh90 million to shareholders on its books as at December 31, to be paid around or on February 28, 2025, if approved.
Portland Cement's return to profit has been anchored largely on fair value gains on investment properties, including land holdings, which recorded paper gains of Sh3 billion for the period, up from Sh644.5 million last year.
The manufacturer also posted an 11 percent growth in revenue to Sh3.2 billion from Sh2.9 billion, although the cost of sales remained elevated at Sh4 billion from Sh3.9 billion previously.
Portland Cement last paid a dividend of Sh0.50 for the year ended June 2011.
The firm was forced to withdraw a Sh0.75 dividend for the year to June 2013 after the Capital Markets Authority (CMA) suspended resolutions passed at a heated annual general meeting in December 2013, including the election of directors and the confirmation of the cement maker’s financial accounts.
The management of the manufacturer teased a dividend earlier this year, driving interest in Portland Cement’s stock, which as of Wednesday was up 350 percent on a year-to-date, trading at Sh36 from Sh8 at the end of last year.
The expectation for the rare dividend was backed by projections of the manufacturer unlocking significant cash flows from the sale of its non-strategic land holdings.
Portland Cement did not immediately disclose the sale of any land parcels, but noted that it looked forward to reinvesting proceeds from the sale to boost production while reducing debt through land swaps.
“To support our long-term goals, a comprehensive plant audit provided a clear roadmap for reinvesting proceeds from asset sales, targeting a 50 percent increase in clinker production capacity. This expansion will elevate cement output, enabling us to meet growing market demand and solidify our competitive position,” the company said in a trading statement on Thursday.
“The company has made significant strides in reducing long outstanding obligations through strategic asset sales thereby freeing resources for growth. These actions, together with other debt management initiatives (land-debt swap), are expected to lower liabilities substantially.”
The company closed the 12-month cycle with Sh35.1 billion in total assets, up from Sh32.7 billion.
Non-current assets fell to Sh28.4 billion from Sh31 billion as current assets rose to Sh6.7 billion from Sh1.7 billion in June last year.
Portland Cement remains technically insolvent as current liabilities continue to outstrip current assets at Sh12.8 billion.
The cement maker saw higher cash outflows during the period due to increased requirements for operating activities, closing the year with cash and cash equivalents of Sh20.7 million from Sh80.2 million last year.
