Tough competition sees Athi River Mining post Sh2bn net loss

Athi River Mining faces bumpy ride from competition. FILE photo | nmg 

By BRIAN NGUGI

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Summary

• ARM Cement recorded a 13.1 per cent drop in group revenue to Sh12.79 billion compared to Sh14.73 billion in 2015.
• Going forward, the firm said it is eyeing to complete the expansion of Athi River grinding plant, which is expected to increase its Kenya capacity by 650,000 tonnes a year.
• The company has announced it is exiting its fertiliser business, which it plans to off-load to a strategic investor by end of the year.

Athi River Mining (ARM) Cement

has posted a net loss of Sh2.80 billion for the year to December 2016, a slight improvement from the Sh2.89 billion reported in the previous period as fierce competition in the industry saw its sales take a tumble.

ARM, which is East Africa’s second-biggest cement producer after Bamburi

, recorded a 13.1 per cent drop in group revenue to Sh12.79 billion compared to Sh14.73 billion in 2015.

It blamed the dip on increased competition and lower cement selling prices in Tanzania.

“The Tanzania business environment continued to worsen during the year,” it said. “Whilst electricity supply normalised, the Tanzania’s government ban on importation of coal in favour of local procurement not only increased manufacturing cost but also impacted on proper capacity utilisation of the 4,000 tonnes per day clinker plant at Tanga due to chronic undersupply.”

Its Kenya business saw production and sales volumes go up 10 per cent even as prices remained stable.

ARM said last year’s capital injection of $140 million (Sh14 billion) from a British Government-owned fund CDC Group, had nearly halved its total debt to Sh13 billion from Sh24 billion the previous year allowing the company to start investing internally generated cash into its business.
Going forward, the firm said it is eyeing to complete the expansion of Athi River grinding plant, which is expected to increase its Kenya capacity by 650,000 tonnes a year.

The company has announced it is exiting its fertiliser business, which it plans to off-load to a strategic investor by end of the year.

“In order to remain focused on the cement business and to raise cash and release a significant amount of working capital locked up in the Mavuno Fertilisers division, the company has decided to all of the non-cement business,” it said.