ARM Cement Limited announced results for the half year ended 30th June 2015 with the following highlights:
Revenue soldered by 1.6% to KES 7.69 Billion attributable to an increase in the cement sales in both Kenya and Tanzania.
Following its commissioning in December 2014, Tanga clinker plant became fully operational (70% capacity utilization) contributing to the growth in the revenue line.
Pre-tax profits plummeted by 24.3% to KES 945.15 Million constrained by a rise in the finance costs to KES 627.04 Million (+183.8%), which related to the construction of the clinker plant which had previously been capitalized as part of the project costs.
This is just a one-off effect hence we anticipate that the future earnings will be more favourable.
The cement manufacturer posted a loss after tax of KES 355.80 Million (-142.0%), compressing the net income margins significantly to 4.63% from 11.20%. This was exacerbated by the sharp depreciation of both the Kenyan and Tanzanian currencies in the last few weeks, which resulted in an unrealized exchange loss of KES 1.4 Billion from their US dollar denominated borrowings, which included the convertible loan notes issued to AFC.
The company’s cash flow position slightly weakened to KES 215.39 Million from KES 1.66 Billion spurred by a rise in the working capital changes which deciphered into a negative effect on the cash generated from operations. Current liabilities soared by 113.5% due to a rise in short term borrowings which were used to facilitate the construction of the clinker plant in Tanzania.
Constrained liquidity ratios and lower profitability was observed from their financial results. Current ratio tapered to 52.3% from 93.7% while both the ROE and ROA stood at -4.01% and -0.97%. The board did not recommend any interim dividend.