ARM expects new clinker line to boost margins

Kenya's ARM Cement expects profitability to improve now it produces its own clinker for its east African cement plants, its managing director told Reuters on Friday.

The company posted a pretax loss of KES473.5m (US$4.5m) in the first six months, which the firm blamed on unrealised foreign exchange losses associated with borrowing for its new clinker plant.

Managing director Pradeep Paunrana told Reuters that the new 1.2Mta clinker plant, which began production in April, was operating at about 75 per cent capacity since production began in April.

"What this essentially means is that our production cost has come down drastically because imported clinker is much more expensive – at least 70 or 80 per cent more expensive than what we are producing locally," he said in an interview.

"So we expect improvement in our margins both in Kenya and in Tanzania with the production of our own clinker," he said. He added that ARM is also selling clinker to other companies in Tanzania, Democratic Republic of Congo, Rwanda and Burundi.