East African Portland Cement Company has issued a profit warning for the year ending June 30th 2016. This follows a Ksh528 million net loss for the half year period to December 2015.
The listed cement maker recorded a Ksh67.8 million loss in the half year period during the previous year. The amount of loss was less compared to this year’s performance following injection of Ksh226.5 million from sale of company’s land.
During the period under review, finance costs shot up by 50% to Ksh279.7 million due to increased uptake of loans to finance projects, including a third cement packaging line. The company also suffered a foreign exchange loss of Ksh187.6 million compared to a gain of Ksh233 million the previous year on account of weakening of the shilling against the dollar and the Japanese Yen.
Revenue grew slightly from Ksh4.1 billion to Ksh4.6 billion. The company is banking on the expected expansion in the real estate sector and growth in the number of infrastructure projects to turnaround its fortunes.
“Production efficiencies and cost control will therefore remain key pillars of the company’s performance supported by growth in volumes. In this regard therefore, the company is restructuring its operations including debt restructuring to reduce the high finance and administrative costs,” said Portland’s Company Aecretary Sheila Kahuki in a statement.
In 2014, the cement company was faced with a series of boardroom wrangles pitting the state and Lafarge, a French conglomerate that controls 41.7 per cent of Portland’s shares.
A number of companies listed at the NSE have issued profit warnings, which means they expect their profitability to fall by at least 25 compared to the previous financial year. They include TPS Eastern Africa (Serena), East African Cables, BOC Kenya, Uchumi Supermarkets and Mumias Sugar.