Cement firm offers lower dividends as profit falls by 34%

Tanga Cement Company shareholders will receive 86/- per share as annual dividends due to a fall of 34 per cent in profit on last year’s financial accounts.

The dividend is however a 65.2 per cent drop from the 247/- per share that shareholders pocketed a year before.

The firm that trades as Simba at the Dar es Salaam Stock Exchange closed the 2011 financial year with an after tax profit of 21bn/- compared to 32bn/- profit the year before.

The fall of profit was caused by higher clinker prices and technical problems at the Tanga plant.

The dividend comprises 25 per cent of net profit, as proposed by the firm’s directors, acting chairperson Samuel Wangwe said.

“Consequently the Board has recommended final dividend of 47/- per share. This amounts to 3 bn/-, the interim dividend per share was 39/-,” said Prof Wangwe

The last day of trading cum dividend was 30th April this year and shareholders will get their dividend by 30th May 2012.

Prof Wangwe noted that operations were affected by higher than normal prices of clinker imports during the first quarter. Clinker is used in the manufacturing of cement.

TCC managing director Erik Westerberg also said the damage of one of the four kiln tyres forced the company to spend more than 12bn/- in refurbishment of the tyre, buying spare parts, maintenance experts and specialized equipment.

“Importing the clinker and the repair of the kiln tyre and other costs reduced the operating profit of the company by more than 12bn/- ,” said Mr Westerberg.

According to the company annual report, the operating profit fell from about 46bn/-  to 38bn/- last year, a 17 per cent drop.

Mr Westerberg noted that there was a slow operation of the company during the first half of last year due to delayed government funding for various infrastructure projects, however, starting August the demand for cement increased which created a health market throughout of the year.

Simba cement increased its sales in line with the demand, achieving a revenue increase of about 8 per cent from more than 149bn/- in 2010 to more than 161bn/- last year.

Despite the increase in revenue last year, the company faced increased in production and distribution costs, which impacted negatively on the earnings before interest, tax and depreciation of 17 per cent compared to a year before.

The company is eyeing to increase its profit this year due to the promising market of East Africa Community empowered by reduced trade barriers, which might on other hand increase competition and possibly consolidation of regional cement industry.

“With the company’s expansion plan now in its final stage and with dedicated and experienced staff, TCC is well positioned to take advantage of this situation,” notes Mr Westerberg
Source: The Citizen,w.thecitizen.co.tz, reported by Felix Lazaro
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