Portland Cement sinks to Sh1.5bn full year loss

State owned cement maker East African Portland Cement has posted a Sh1.45 billion net loss for the year ended June 30.

This was a drop from the Sh4.1 billion profit the cement maker posted last year as cement sales continued to drop.

During the period under review, Portland Cement’s revenues dropped by 22 percent from Sh8.8 billion to Sh6.9 billion attributed to ‘production challenges’ during the year.

However the firm’s operations remain in jeopardy as its liabilities continue to exceed its assets.

In the year under review, Portland’s current liabilities rose to Sh6.19 billion outstripping its current assets worth Sh1.9 billion, further straining the firm’s operations.

Portland Cement however recorded foreign exchange gains of Sh134 million compared to a loss of Sh305.7 million made during a similar period last year.

“….owing to favorable exchange rate movements of the Japanese Yen which offset adverse effects of the depreciation of the shilling against the US dollar,” the firm said in a statement.

The cement maker was able to cut its administrative expenses to Sh2.28 billion from Sh3.25 billion, attributing it to a one off inventory adjustment charge and cost management initiatives undertaken during the year.

“Management has reconfigured the distribution system to strengthen various sales channels to respond to customer requirements,” the firm added

The cement industry has over the past five years become more competitive with the entry of new players as well as continued influx of cheap cement imports.

Portland Cement said its looking towards restructuring its business to cope with excess supply in the market at a time the real estate sector appears to be stalling.

The firm also expects cement prices to remain low in the medium term.

“The company is focusing on volume growth, production improvement and cost containment measures to impact positively on the company’s performance. The company is in the process of restructuring operations in order to enhance its competitive position,” Portland said in its statement.

The board did not recommend a divided to shareholders.