Kenyan cement maker Athi River Mining suffered a 61 per cent drop in pretax profit to KES296.90m (US$3m) in the nine months ended September, dragged down by unrealised foreign exchange losses, it said on Monday.
The shilling has lost about 20 per cent against the dollar this year on the back of high inflation and a jump in the import bill, hurting companies’ earnings across sectors.
Athi River, ranked as the third largest cement firm in the east African nation, had to make provisions of KES681m on its dollar-denominated borrowing, wiping off the impact of a 37 per cent rise in revenue for the period.
"This exchange loss provision does not immediately impact the company’s cash flow, and any reversal of the weakening of the Kenya Shilling against the US Dollar will result in a reduction of the provision," it said in a statement.
Athi River has been using the dollar-denominated loans to fund the construction of new cement plants in the region.
"The company continues to be positive about economic growth in the East Africa region and in particular about the construction sector, despite the prevailing adverse macro-economic conditions," Athi River said.