East African Portland Cement has converted part of a yen-denominated loan into dollars to reduce its exposure to foreign exchange losses following a surge in the Japanese currency, a newspaper reported on Tuesday.
Portland’s earnings have been hurt for three straight years by huge foreign exchange losses, after the global financial crisis of 2008 sent the yen on a sharp ascent.
Business Daily quoted Portland’s Managing Director, Kephar Tande, as saying the firm swapped a quarter of its KES3.6bn (US$38.5m) loan for dollars from yen in the first half of 2011, before converting another 25 per cent tranche of the total in July, in a deal arranged by a local commercial bank.
The volatility in the exchange rate between the shilling and the dollar had been lower compared with that between the shilling and the yen, Tande told the newspaper, meaning that the foreign exchange losses had been cut by KES100m since the swaps.
The firm lost of KES119.06m (US$1.30m) in its year ended last June after a loss of KES338.57m in the year earlier period, after a higher unrealised foreign exchange loss offset an eight per cent growth in sales revenue.