Tanzanian cement producer, Tanga Cement, reported a 32 per cent drop in 2011 net profit due to the depreciation of the local currency, erratic power supply and rising costs of imported clinker.
The company, part of South Africa’s AfriSam group, said net profit fell to TZS21.93bn (US$13.9m) last year from TZS32.2bn the year before despite positioning itself well to meet rising cement demand, according to reports in All Africa News.
Tanga Cement acting chairman, Prof. Samuel Wangwe, said growth in sales revenue was offset by a sharp increase in the cost of sales compared to 2010.
"This was largely due to a major refurbishment of the plant, resulting in a higher than normal proportion of imported clinker being used in the manufacturing process during the first quarter of the year," Prof. Wangwe said. He added: "This was further aggravated by a substantial increase in energy costs and by difficulties encountered due to the unreliable supply of electricity."
Prof. Samuel Wangwe also noted that the depreciation of the Tanzanian shilling also impacted negatively on the financial performance as a significiant proportion of costs were incurred in foreign currencies.
Revenue grew to TZS161.44bn during the year under review compared to TZS149.2bn. "Although slightly lower than the growth achieved in previous years, sales volumes and revenues increased in line with market demand," Prof Wangwe commented.