Displaying items by tag: East African Portland Cement Company

Kenya: East African Portland Cement (EAPC) has hired Ernst & Young to conduct a forensic audit of its business following reports that the company is technically bankrupt and may have lost around US$7.1m worth of stock from its warehouses since 2014. Cement stock valued at US$4m went missing in Kenya and US$3.1m disappeared in Uganda, according to the Business Daily newspaper. Ernst & Young started work for the state-owned cement producer in early November 2016.

Kenya: East African Portland Cement’s (EAPCC) profit has fallen by 42% to US$41m in the first half of 2016 from US$70.7m in the same period of 2015. It has blamed the drop on a fall in the revaluation gain of its assets, according to the Daily Nation newspaper. Its revenue rose by 5.4% to US$87m but this was adversely affected by rising cost of sales. The cement producer asked for regulatory approval to publish its financial results after a 31 October 2016 deadline.

Tensions have boiled over regarding imports of cement to Kenya in recent weeks as different importers have received opprobrium in the local press. Last week Dangote Cement was attacked for importing cheap cement into the country from Ethiopia, allegedly off the back of a cheap electricity deal. This week, Chinese imports have been in the firing line, following data reportedly seen by the Business Daily newspaper that showed that the value of Chinese cement imports rose tenfold year-on-year in the first half of 2016.

At the heart of these rows lies a strong demand for cement: Kenya had a cement production utilisation rate of 90% in 2015 according to Kenya National Bureau of Statistics (KNBS) data. It produced 6.35Mt in that year and used 5.71Mt for consumption and stocks. Its utilisation rate has been rising steadily since 2012. It was 93% for the first six months of 2016.

Unfortunately for the local producers this kind of demand attracts competition from within and without. Nigeria’s Dangote Cement is planning to build a 3Mt/yr plant at Kitui and Cemtech Kenya, a subsidiary of India’s Sanghi Group, is planning to build a 1.2Mt/yr plant at Pakot.

Local producer ARM Cement reported both falling turnover and a loss for the first half of 2016. It blamed this on increased competition in Tanzania. However, in 2015 it increased its turnover in Kenya by importing clinker over the border from its new Tanga plant in Tanzania. It also noted a ‘competitive landscape’ in Kenya and lamented the effects of currency devaluation on its financies as a whole. East African Portland Cement had a tougher time of it for its half-year that ended on 31 December 2015, issuing a profit warning of a loss and expected reduced profits despite a rise of 12% in sales revenue. By contrast, Bamburi Cement, LafargeHolcim’s subsidiary, reported both increases in revenue and operating profit in 2015. Although it too noted problems with interest rates and currency depreciation in the country during this period.

The focus on Chinese imports follows Chinese contractors winning some of the biggest infrastructure projects in the country. The China Rail & Bridge Corporation (CRBC), for example, is building a railway between Mombasa and Nairobi. The Business Daily newspaper has found data showing that Chinese cement imports worth US$19.8m to Kenya in the first half of 2016 compared to US$1.99m in the same period of 2015. The background to this is that China has more than doubled the value of all of its imports to Kenya since 2011 according to the KNBS. Total import volumes of clinker from all foreign countries increased by 51% in 2015 from 1.31Mt in 2014, the largest increase in at least five years.

If local cement producers are being locked out of supplying these kind of deals no wonder they are getting angry. However, another angle on what’s happening here might be that local producers who are suffering from increased competition, falling prices and a precarious national financial situation are lashing out at the easiest target. The local press doesn’t appear to have criticised ARM Cement for moving its Tanzanian clinker north of the border for example. Likewise, a Bamburi Cement spokesperson previously said that the producer had supplied 300,000t of cement to the rail project since September 2014, earning it nearly US$10m. Kenya needs cement as it builds its infrastructure. Fortunes will be made and tempers will be lost as it does so.

Kenya: East African Portland Cement (EAPCC) has issued a profit warning due to mounting losses caused by higher financing costs and currency market losses. Its loss for the half year that ended on 31 December 2015 grew to US$5.22m from US$0.64m in the same period in 2014. The cement producer also expects its profits for the 2015 – 2016 financial year, which ends on 30 June 2016, to fall by at least 25%.

EAPCC’s financing costs rose by 50% to US$2.74m, which it attributed to increased use of debt to finance capital projects, including the setting up of a third packing line to support higher sales volumes. Sales revenue rose by 12% year-on-year to US$45.2m from US$40m. Sales volumes rose by 16%.

Kenya: The board of directors of the East African Portland Cement company (EAPCC) has appointed Albert Sigei as its Chief Operating Officer with effect from 24 August, 2015. Sigei will be responsible for production operations, production engineering, supply chain management and sales and marketing. He will be based in the Athi River Office.

Sigei has worked in the cement industry for 18 years. His last role was as the Vice-President of Business Support & Ready Mix operations with Lafarge in Nigeria. He has previously worked with Pricewaterhouse Coopers. Sigei holds a BSc in Engineering from the University of Nairobi.

Kenya: Lafarge has appointed two directors to the board of East African Portland Cement Company (EAPCC) following the exit of Titus Naikuni after eight years with the company. EAPCC said that the terms for ex-Capital Markets Authority chairman Kung'u Gatabaki and Sarone Sena, chairman of Eldoret University council, are effective immediately. Bill Lay was reappointed as EAPCC chairman for a three year period, effective from 7 November 2014, by president Uhuru Kenyatta.

Kenya: The East African Portland Cement Company (EAPCC) has begun the process of upgrading its Athi River cement plant, a project that is expected to cost approximately US$11.1m. The upgrade will halt the plant's normal operations for six weeks.

According to EAPCC head of production, Joseph Kombo, the upgrade targets the kiln and the packing plant. "In the packing plant, we are upgrading the mechanical and electrical components of the packers as well as improving the bag conveying system, all geared towards improved the loading process and quick turnaround thus ensuring customer satisfaction," said Kombo. "We are installing a bag house to replace the electronic precipitators, retrofitting the raw-mill gear box, replacing three sections of the cement kiln shell and installing a radio link into the raw material handling sections, among others."

EAPCC plans to improve reliability, increase production and improve energy-efficiency. The bag house will reduce emissions from the plant to insignificant levels, complying with international emission standards.