NAIROBI, Kenya
East African Portland Cement Company (EAPCC) on Friday announced a net profit of Sh2.488 billion for the full year ended June 30, 2013, a major turnaround from the previous year’s loss of Sh969.7 million. The impressive performance, which represents a 356 percent improvement, has been attributed improved sales and cost-cutting.
Managing Director Kephar Tande said that revenues grew 8 percent to Sh9.2 billion, while the cost sales dropped by Sh500 million, doubling the company’s profit margin from 13 percent in 2012 to 25 percent in the year under review. This was also felt in other profit indicators such as profit after tax which went up to Sh1.8 billion from 973 million the previous year, while profit before taxation was Sh1.4 billion against a loss of Sh1 billion the prior year.
“Due to sustained marketing campaigns and improved supply of cement to the market, turnover grew while cost of sales reduced due to stringent cost management and rationalization of operational activities,” said Mr Tande while announcing the results.
The results were lifted in huge party by tax credit of Sh356 million, which arose from write-back of initially provisioned tax expenses that did not materialize in the period under review, and a Sh713 million net gain from revaluation of free hold property. Also, the company made a gain of Sh595 million from the strengthening shilling and improved performance of its hedging strategy.
“Our growth strategy has paid off,” he said. “Our market has improved from 14 percent in 2012 to 20 percent at the end of June.” Tande said the cement market is getting more competitive and EAPCC was positioning itself to grow its market share through deeper market penetration in counties and increased reach in exports destinations of Uganda, South Sudan and Northern Tanzania.
He said they were banking of increased infrastructure projects in the country to lift demand and appealed to the government to remove duty exemption on imported cement meant for government projects. “As local manufacturers, we are unable to compete for government projects because of this tax exemption,” he added.
Mr Tande said the company plans to invest Sh500 million in plant and equipment improvement in the current year to boost production and efficiency. He said the money will go into constructing new packing line, acquisition of new clinker and milling, and establishment of a new pre-cast line of products. Investment over the next two years is expected to hit Sh2.7 billion, he said.
The company declared a dividend of 75 cents per share, up from 5 cents two years ago. The company did not pay divided in 2012 due to the huge loss it suffered.
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