Portland Cement seeks creditors help after announcing profit alert

Workers at the East African Portland Cement Company factory: The cement maker expects this year’s earning to drop by at least 25 per cent. PHOTO | FILE  

By GEORGE NGIGI

The East African Portland Cement (EAPCC) has disclosed plans to restructure its debt portfolio as it seeks to rebound to profitability after announcing a profit warning Thursday.

The Nairobi Securities Exchange-listed cement maker Thursday reported a net loss of Sh531 million for the half year ended December compared to an after tax loss of Sh65.3 million a year earlier.

EAPCC, which also issued a profit warning for the full year ending June, attributed the losses to higher financing costs and forex losses.

“The company is restructuring its operations including debt to reduce the high finance and administrative costs in order to enhance its competitive position,” said EAPCC’s company secretary Sheila Kahuki in a statement.

Sources within the cement manufacturer disclosed some of the options being looked at include the government taking up the Japanese Yen denominated loan, which exposes it to forex losses.

READ: Portland Cement issues profit warning on soaring costs, FX losses

EAPCC recorded forex losses of Sh188 million compared to a gain of Sh233 million an year earlier, attributed to weakening of the shilling against the dollar and Japanese yen.

In 2011 the company had swapped a portion of the yen denominated loan with dollars, a decision that came to haunt it last year as the dollar gained against other global currencies including the shilling.

The company is said to have also met KCB Thursday in an effort to restructure its debt with the bank.

EAPCC’s liabilities increased by Sh2 billion in the year to December 2015 which resulted in a 50 per cent increase in its financing cost to Sh279 million.