Inflation, power problems eat Tanga Cement's profit

Tanga Cement's net profit dropped 32 per cent, with the cement manufacturer blaming the fall on depreciation of the shilling, erratic power supply and rising costs of imported clinker.

The company, trading on the Dar es Salaam Stock Exchange as Simba Cement, saw its net profit falling to 21.93bn/- last year from the previous year's 32.2bn/- despite positioning itself well to meet the raising cement demand in the region.

The Simba Cement board of directors' acting Chairperson Prof Samuel Wangwe said the growth in sales revenue was offset by sharp increase in the cost of sales when compared to 2010.

"This was largely due to a major refurbishment of the plant, resulting in a higher than normal proportion of imported clinker being used in the manufacturing process during the first quarter of the year," Prof Wangwe said.

Prof Wangwe
The economics professor added: "This was further aggravated by a substantial increase in energy costs and by difficulties encountered due to the unreliable supply of electricity."

The firm saw earning per share dropping to 344/- from 506/- during the previous year while full year dividend declined to 86/- from 247/-. The 3bn/- set aside for dividends, according to the acting Chairman, is 25 per cent of net profit after tax and the Board recommended a final dividend of 47/- per share.

Prof Wangwe said in a statement that depreciation of the shilling also impacted negatively on the company's financial performance, as a significant proportion of costs were incurred in foreign currencies. Revenues grew to 161.44bn/- during the year under review from the previous 149.2bn/-.

"Although slightly lower than the growth achieved in previous years, sales volumes and revenues increased in line with market demand," said professor Wangwe.

Simba whose shares traded on the bourse at 2,380/- on Thursday is reported to have positive outlook because of expected growth in demand for cement in the region.

"In anticipation of expected growth within the construction industry, the company has prepared itself to meet the increased in demand," Prof Wangwe said, adding that the goal will be achieved given its reputation for high quality and excellent distribution network.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza
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