Cement firm profit to dip due to stiff competition
East African Portland Cement has announced that it expects its profit for the year ending June 2014 to drop by 25 per cent.
The company attributes the drop to increasing competition and high staff costs.
“These challenges have had an adverse effect on sales revenues,” said a statement from the firm.
The company, which made a pretax profit of Sh2billion in 2013, also said tough economic conditions in the region, including depreciation of the Kenya shilling might play a role in the reduced profits.
In March, the company announced that its pretax profit had more than halved for the six months ended December, falling to Sh171 million from Sh376.5 million in the same period in 2012.
For the period, the company’s cost of sales increased by 1.4 percent to Sh3.25 billion. Its administration and selling expenses rose to Sh1.26 billion from Sh1 billion, while earnings per share dropped to Sh2.03 from Sh3.68.
In 2013, the company’s Managing Director Kephar Tande said they made high profits due “to sustained marketing campaigns and improved supply of cement to the market. Cost of sales reduced due to stringent cost management and rationalisation of operational activities.”
In reclaiming its lost glory the firm’s new chairman, Mr Bill Lay, is expected to lead efforts directed towards turning around the cement company after it suffered a tainted image following the sacking of its board members and the corruption allegations made against the personalities previously at the helm.
Portland, the manufactures of the Blue Triangle brand of cement and exports to Uganda, South Sudan and Northern Tanzania.