Kenya’s East African Portland Cement (EAPC) will slash its dividend payout in future to boost its cash reserves for financing expansion, managing director Kepha Tande has said.
Shareholders of the cement manufacturer will earn a dividend of KES0.50/share this year, after going without any payout last year.
Mr Tande said EAPC has lined up capital-intensive projects in the medium term which will take up most of the listed firm’s cash reserves.
The projects, Mr Tande said, include construction of a new multi-million shilling grinding plant in Kitui County.
EAPC, which is ranked as the second largest cement maker by market share, spent KES1.4bn to install a coal-powered kiln this year, which it hopes will cut its reliance on costlier fossil fuels.
“We have a focus on slashing our dividend payout moving forward to help us finance new capital projects that would be critical to enable the company gain market share and a competitive edge,” said Mr Tande.
EAPC paid a dividend of KES1.30/share in 2009, which was half the amount paid in 2007 after going 2008 without any payout.
Mr Tande said the dividend payout in the subsequent reporting periods would “certainly be lower.”
Portland Cement is facing stiff competition especially from newer entrants. It is betting on its newly-acquired status as a public limited company to increase its competitiveness and profitability. The cement maker joins other listed companies that have recently put shareholders on notice for lower dividend pay, as corporations turn to internally generated funds to finance its expansion in the face of growing uncertainty in the financial markets.