Tanga Cement posts 35bn/- loss on stiff competition

HENRY LYIMO

TANGA Cement shareholders will get no dividend for 2017 after the cement maker made loss despite increased sales and production volumes.

The Dar es Salaam Stock Exchange (DSE) listed cement manufacturing company trading under Simba Cement brand made a 35bn/- loss before tax last year from 6bn/- profit in 2016 even after recording increased sales revenue by three per cent to 172bn/- last year from 167bn/- in 2016.

The Chairman of the Board of Directors, Lau Masha told shareholders at the Annual General Meeting in Dar es Salaam over the weekend that competitive market headwinds had impacted on profitability due to lower sales prices dictated by the market compared to 2016.

He said the Group had not declared an interim dividend for the 2017 and did not anticipate proposing a final dividend to shareholders in line with financial performance for the year.

“The Board elected to be prudent by committing available cash resources to the operational and debt service commitment,” he said.

Gross profit for 2017 declined by 46 per cent to 29bn/- from 54bn/- in 2016 and earnings before interest, taxes, depreciation, and amortisation (EDIBITA) declined to 9bn/- from 38bn/- in 2016.

The reduction in edibita was mainly caused by lower sales prices dictated by the market compared to the prior year, he said. Selling and administrative expenses had increased by 10 per cent to 20bn/- to support significantly improved sales and production volumes.

The increase in the depreciation charge of 6 per cent was driven by depreciation of the new integrated production line for the full year last year compared to 10 months in the prior year as well as additional capital investments in 2017 to improve production efficiencies.

The Board Chairman said they remained optimistic about their sales and cost optimisation production initiative banking on government heavy investment in mega infrastructure projects and the ongoing industrialisation drive which will boost cement demand.

“The company remains positive in 2018 despite the increased competitive landscape. Government initiative to spur economic growth through infrastructure development and promotion of local industries is earmarked to boost local cement demand while reducing the influx of low cost imported cement.”

The government is heavily investing for development of mega infrastructure projects that are expected to spur economic growth and development.

Some of the projects are a 2,100-megawatt (MW) hydroelectric plant at Stiegler’s Gorge along Rufiji River to help in supply of reliable electricity for industries.

The government also plans to spend $14.2 billion over the next five years to build a 2,561 km-railway network - part of plans that also include upgrading ports and roads to serve growing economies in the region.

Jointly with Uganda’s government, Tanzania is constructing a $3.55 billion crude oil pipeline between Uganda and Tanzania intended to transport crude oil from Uganda’s oil fields to the Port of Tanga. On completion, the 1,445 kilometre project will become the world’s longest heated crude oil export pipeline.