East African Portland Cement yesterday announced a return to profit in its half-year results. Established back in 1933, the company produces 600,000t of cement annually, selling under Blue Triangle Cement brand name.
The pre-tax profit rose to Sh360 million between July and December last year, a turnaround from a Sh508 million loss during the same period in 2003. The firm’s managing director, Ole Mapelu Zakayo attributed the better performance to an increase in cement demand, and production efficiency. Sales revenue rose 27 per cent because of better trading terms and favourable product prices as a result of higher demand. "The sales volumes experienced an upsurge of 22 per cent in spite of a drop in export sales."
However, the company has a Sh4.1 billion debt, which the Government acquired in the 1990s from the Japanese Government to boost the company when the industry was experiencing downturn and was given in yens. Mr Zakayo said the company wants to overcome the debt and move forward without being pulled back by the loan.
"We are also faced with the challenge of reducing production costs. At the same time we are lobbying for higher quality power with minimal interruptions so as to optimise our milling and cement production," he said. Six months ago the company was spending Sh25 million per month in electricity bill, but now it is spending over Sh30 million.
Deteriorating road and rail networks in the country have been a major factor, leading to a decline in investment and economic activity. Mr Awori called for a government-private partnership to rehabilitate the infrastructure. He said the Government is planning to widen the railways, and add another line between Mombasa and Nairobi, as well as an oil pipeline to Southern Sudan following the recent signing of a peace agreement between rebels and the Sudan government. Mr Awori said the Government was also looking favourably on the use of cement in road construction instead of the traditional bitumen, because it lasts longer.