Portland profit up by 200%, Kenya

Portland profit up by 200%, Kenya
Published: 02 March 2010

East African Portland Cement has reported a 200 per cent rise in pre-tax profit in its half year ending December 31, 2009.

This can mainly be attributed to increased activities in the construction industry especially the roads segment.

From a loss of Sh489 million in its half year earnings for 2008, the firm rallied on the rising demand for cement to post Sh434 million in the half year of 2009.

Following the commissioning of a new plant, Portland’s capacity increased in the period under review with revenue growing by 22 per cent compared to the previous period.

A marginal depreciation of the Kenyan shilling against the Japanese Yen during the six months, however, resulted into Sh58 million exchange loss compared to Sh1.06 billion in the previous period.

EAPC borrowed Sh1.7 billion through a yen-denominated loan in 1996 to expand its production capacity.

Since then, this has considerably increased its financing costs thus eating into its profit.

"If the current trend is sustained, the continuing strengthening of the Yen against the Kenyan Shilling could lead to higher finance cost and erode the company’s profit," said company secretary John Maonga in a notice on Monday.

Last year, the firm announced that it would issue a convertible bond at the Nairobi Stock Exchange to hedge the loan.

The amount repayable shot up after the yen appreciated against the domestic currency in the wake of the financial crisis.

But with the increased demand for cement in the market, EAPC is looking forward to better results in the remaining half of the year.

This will see an improvement on its sales volumes as production is on the rise.