EAPCC announces Ksh7.3 Billion profit before Tax

By Claire Wanja

East African Portland Cement Company (EAPCC) has reported profit before tax of Ksh 7.3 Billion, for the year ended 30th June 2015. 

This included an unrealised gain on revaluation of investment property, amounting to Kshs7.2 Billion, income from compensation for compulsory acquisition of SGR land of Kshs. 836m and forex gains of Kshs. 175m on its hedged Japanese Yen loan.

The results were announced Friday following the conclusion of the process of land revaluation as required by the International Accounting Standards.

According to the Chairman, Mr. William Lay, the investment property, consisting of two parcels of land in Athi River, was valued at Kshs9.4 Billion up from Kshs2.25 Billion the previous year.

The increase in value follows the effect of compensatory rates for land acquired compulsorily by Government for SGR Project in the area. Part of the land has been invaded and the Company is pursuing legal channels to evict the invaders.

“The Company has not sold and is not selling any parcel of land. All invaders will be removed,” said the Chairman, Mr. William Lay.

EAPCC MD Mr. Kephar Tande also noted that on the operating front, the Company’s turnover decreased by 7% to Ksh 8.4 billion largely attributable to prolonged plant shutdown undertaken from October to December 2014, to install a new dust management plant in order to comply with NEMA regulations.

“The company also took advantage of the shutdown to upgrade parts of its plant to boost reliability and future production. In addition, turnover was negatively affected by continued erosion of cement prices, which reduced by about 5% during the year. Gross profit reduced from 26% prior year to close at 22% due to purchase of clinker when the plant was down. As a result the company made an operating loss of Kshs. 577m having spent Kshs. 1.1 billion on purchased clinker during the plant shut down. This was a difficult year compounded by the need to invest aggressively in order to revamp our aging plant,” said Mr. Tande

EAPCC foresees continuing growth in the construction sector, driven by ongoing major infrastructural projects and a fast expanding real estate sector.

“The company expects to benefit from this increasing demand by leveraging its new investments in additional capacity brought about by the recently completed new cement packing line and cement mills feeding system,” added Mr. Tande.

The company spent approximately Kshs 1.2 billion in new investments in the plant during the year. This was funded largely through bank loans from a local bank, adding to the cost of finance which went up by 16% to Kshs. 369m.

However, the company is looking at ways of restructuring its finances as part of a long term strategy for growth. Emphasis on cost management going forward will be prioritized as realized in the reduction of selling & distribution and administrative costs by about Kshs. 200m in the year.

The Chairman also noted that performance had been boosted.

“The Company expects to improve plant performance through a Technical Support Services Agreement with Lafarge-Holcim signed in June 2015 and the hiring of a Chief Operations Officer. Other investments lined up to improve production include installation of a new clinker Cooler for the Kiln expected in first quarter of 2016. The new Cooler is designed to stabilize clinker production,” said Mr. William Lay.


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