Companies

Portland Cement returns to profit on asset valuation, tax credit

cement-pic

Entrance to the East Africa Portland Cement factory in Athi River. FILE PHOTO | NMG

East African Portland Cement Plc (EAPC) #ticker: PORT posted a Sh1.8 billion net profit in the year ended June, helped by gains in its land holdings and a larger tax credit.

The company had made a net loss of Sh2.7 billion the year before.

Portland booked a fair value gain of Sh5.7 billion in its investment property in the review period, up from a Sh1.1 billion gain a year earlier.

The company's tax credit also increased to Sh151.6 million from Sh29.2 million, further boosting the bottom line.

Without the property revaluations and tax credits, the cement maker would have made a large loss.

Its loss from operations increased to Sh3.2 billion from Sh3.1 billion.

The operating loss came as costs increased faster than revenues.

Sales rose to Sh2.7 billion from Sh2.4 billion but other expenses, including production costs, rose by a larger margin, resulting in losses from normal operating activities.

The company did not declare a dividend for the period, extending the multi-year payout drought.

The State-owned EAPC has been grappling with underfunding in a competitive cement market where private firms are growing their market share on the back of cheaper pricing and increased investment in capacity expansion and product diversification.

Sale of part of EAPC's large land holdings has been one of the proposals of recapitalising the company whose short-term liabilities exceed it's current assets.

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