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By Philip Ngunjiri
Reports that the mill will increase the cement maker's output from 600,000 tones per year to nearly a million
The East African Portland Cement will use its own money to finance the building of a Ksh800million ($10.9 million) fifth clinker plant that will see its production capacity increase by nearly 100 per cent.
The company, which sell its Products under the brand name Blue Triangle, will also pay for the acquisition of a 49 per cent stake in the Kigali Cement Company.
The Kigali buyout will cost East African Portland about Ksh150 mil-lion ($2 million), although the deal has yet to be sealed.
It is also in the process of expanding its grinding capacity by investing in a new closed circuit
cement mill, which will be commissioned within the next 18 months.
This, according to company chairman Benson Ndeta, is part of the company's regional market expansion strategy to meet the growing local and regional demand for cement. With four mills in operation, Portland Cement cranks out 80 tonnes of clinker per hour.
“We are reviewing plans to modify and upgrade the clinker production plant from 1,600 tonnes per day to 2,100 tonnes per day. We won't be raising any money through the capital markets. We'll do this using our own finances,” says Mr Ndeta.
The mill will boost the cement maker's output from 600,000 tonnes to nearly a million tones per year. The investment is expected to grown the company's assets by one-third.
Kigali Cement controls five per cent of the Rwandan cement market, with the rest being shared by the state-owned Cemerwa and Uganda 's Hima Ltd.
Kenya
's Bamburi Cement holds a controlling
interest in Hima Cement and has a
principle interest in East African
Portland and Athi River Mining. Kenya
's other cement firm. “We believe
our growth catalyst will come from
emerging regional markets of southern
Sudan , Somalia and Rwanda. We are
also confident about the future of
East Africa ,” says Mr Ndeta.
Our growth catalyst will come from emerging regional markets of southern Sudan , Somalia and Rwanda
Mr Ndeta also sees a big opportunity to increase the use of cement in the construction industry by promoting and demonstrating its advantages of cement over competing materials.
Industry experts say demand for cement has increased following the return of peace in Sudan , the calming of conflict in the Congo and growing cement consumption by the construction industry in Kenya , Uganda , Rwanda and Madagascar .
“There is a likelihood of there being a shortage of cement,” says Dr Zephania Ong'ata, programmes director at the East African Centre for Economic Policy and Analysis, a regional institution on macroeconomic policy, inequality and poverty.
Buoyed by a vibrant industry that saw the demand for cement grow by about 15 per cent, Portland's sales revenue for the year ended June 2005 grew by 29 per cent, from Ksh4.1 billion ($55.4 million) to Ksh5.3 billion ($71.6 million), the first time the company's sales revenue hit the Ksh5 billion ($67.5 million) mark.
The
company, which was previously associated
with loss making, increased its market
capitalization from Ksh2 billion ($27
million) to Ksh10 billion ($137 million),
as well as growing its gross profit
by 21 per cent, from Ksh1.3 billion
($17.5 million) to Ksh1.57 billion
($21.2 million).
Mr Ndeta says this was achieved in spite of increased costs of certain items such as oil, transport and raw materials. “These results, achieved during a period of hardship, have emboldened us to continue with our commitment to meet our obligations to our shareholders,” he says.
Although the company's cost of sales increased marginally, it reduced its overheads by 24 per cent, from Ksh860 million ($11.6 million) in 2004 to Ksh655 million ($8.9 million) in 2005. Coming down from a pre-tax loss of Ksh391 million ($5.3 million) in the year2003/2004, the company managed to post a pre-tax profit of Ksh1.086 billion ($14.2 million)
The results are attributable particularly to cost control initiatives and a 21 per cent increase in volumes. |
