Tanga Cement reports decline in half year revenue as competition mounts

TANZANIA – Tanga Cement Plc, the producer of Simba Cement brands, has published results for the half year ending June 30, 2019, repots The East African.

The Dar es Salaam Stock Exchange-listed company said the results were largely aimed at damage control after it had earlier published a cautionary notice advising its shareholders that it expected a drop in its operating profit.

“The company’s sales revenue declined by only 1 percent in the first half of 2019 compared with the first half of last year, and it was able to sustain a healthy gross profit margin of 26 per cent for both period”, said the board chairman Lawrence Masha.

The revenue declined from Tsh98.9 billion (US$42.92m) to Tshs97.6 billion (US$42.36m).

Mr Masha attributed the drop to market headwinds in an increasingly competitive cement sector coupled with additional depreciation expense triggered by the adoption new IFRS 16 accounting standards on leases.

In October the company, which trades under its Simba brand name, published a cautionary notice advising its shareholders that it expected its operating profit for the first six months of 2019 to be “between 112 and 122 per cent lower than that of the comparative period for 2018.”

“Tanga Cement Plc also expects that its loss per share for the period ended June 30 will be between Tsh157 (6.8 US cents) and Tsh167 (7.2 US cents), which is between 461 per cent and 496 per cent lower than its loss per share for the six months ended June 30, 2018,” the notice signed by Mr Masha warned at the time.

Mr Masha added that the company has invested in additional ‘once-off’ expenses to expand and improve its sales, logistics and distribution services to customers in the long term to “yield the desired returns for the remainder of the year (2019).”

The cement maker did not declare interim or final dividends to shareholders for the period.

Founded in 1981, Tanga Cement is 62.5 per cent owned by Afrisam Mauritius and with a market capitalisation status of Tsh38.2 billion.

Its current cement production capacity is measured at just over 1.25 million tonnes a year.

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