The East African Portland Cement Company (EAPC), a state-owned firm lined up by the government for privatization, on Wednesday reported a 25 percent increase in loss to 1.28 billion shillings for the half year ended December 2018.
The loss is an awful jump, up from the 949.2 million shillings loss it posted six months before.
EAPC has attributed the increase in losses to a spike in output prices, unfavorable market conditions, and production challenges arising from the firm’s constrained working capital.
The performance notes accompanying the results noted that the challenges have affected the ability of the company to effectively provide the product sufficiently to all its customers.
EAPC says that the sales revenue declined by 55 percent over the same period in the prior year leading to an increase of 66 percent in loss from operating activities.
“Finance costs declined by 53 percent owing to the restructuring of financing facilities. The current liabilities exceeded current assets by 7.3 billion shillings. The board is aggressively pursuing balance sheet restructuring to effectively address the negative working capital,” read the statement.
It was also noted that relevant consultations and approvals to recapitalize the business have been obtained by the company to try and ameliorate the dire situation.
Nevertheless, EAPC’s board says there are hopes and that the company will continue reaping from a reduction in administrative expenses driven by the ongoing staff rationalization and outsourcing of non-core administrative services will be reflected in future.
EAPC is banking its hopes on President Uhuru Kenyatta’s Affordable Housing pillar of President Uhuru Kenyatta’s Big Four Agenda to boost its sales and return to profitability.
“Future market outlook remains positive with the unveiling of the Big Four Agenda by the national government where affordable housing and manufacturing were among the top priorities. The competitive environment is expected to result in subdued cement prices in the near future,” stated the notes following the unaudited results.