KENYA'S PORTLAND CEMENT'S TIME TO LIVE OR DIE.

There is no running away from it: The time  has come for Kenya's East African C Portland Cement PLC to fight to live or lay down and die.

According to the interim figures for the half year to December 2018 released this week, the picture looks very bleak and EAPC may indeed need all the help it can get to survive.

From the figures, only two items on the balance sheet gave any cause for smiles: Income from other sources other than  core business and finance costs.

Finance costs dropped by 34.7% to Ksh 204.7m from Ksh 313.5m indicating some reward for efforts to reduce its pressure while Other income rose to Ksh 20.4m from Ksh 1.2m.

Unfortunately, both were drops in an ocean of bad news. The first main challenge was that core revenue declined by 55.2% to Ksh 1372.1m thus dragging total revenue down 54.5% to Ksh 1393.37 from Ksh 3064.7m.

Then direct cost that the core revenue refused to decline as fast as the core revenue. It dropped by only 38.3' to Ksh 1800m from Ksh 2916.7m thus enlarging gross loss from Ksh 145.4m by December 2017 to Ksh 428m.

To make matters worse, despite management determination to trim cost and increase efficiency, operating expenses rose by 1.05% to Ksh 1011.5m. Yes, this was a very marginal growth and could have been that marginal because of cost cutting but the signals are still clear: Not enough has been  trimmed.

In the end, with finance income reducing by 2.14% to Ksh 1.37m, EAPC loss before tax grew 41.6% to Ksh 1622.3m from Ksh 1145.4m.

This jump becomes rather scary when the loss is related to total revenue. Do that and it says EAPC lost Ksh 116.4 per each Ksh 100 income within the period, compared to Ksh 37.4 loss on the same Ksh 100 income previously.

That indeed,  is top speed drainage and could make it very hard for the company to survive if it continues that way.

Already, working capital continues to be increasingly in short supply. By December 2018, the deficit was Ksh 7327.4m compared to Ksh 6007.4m earlier.

Of course, the directors and management are aware and says, the Company Secretary, Sheila Kahuki, are busy looking for ways to beef up working capital and that includes hoping for a helping hand from the government.

They know too that revenue and bottom line were hit by input price growth; competition at the market place and production challenges.

And so, says Kahuki, they remain focused on how to increase market share; rationalise staff cost, improve efficiency and even out source some core administrative activities.

However, every one also should recognise that should all of these efforts fail to move the elephant at the door, its next full step may bring down the house.

E.A.PORTLAND CEMENT: Kshm 1/2yr.
                       Dec 2018.  Dec 2017
Total revenue 1393.37.    3064.7
Core revenue  1372.1.      3062.1
Cost of sale    1800.0       2916.7
Gross profit.    (428).          (145.4)
Other income      20.4.            1.20
Expenses.        1011.5.      1001.0
Op. Profit.       (1419.0).    (854.4)
Interest inc.          1.37.         1.40
Finance costs    204.7.       313.5
Profit b4 tax.   (1622.3).   (1145.4)
Profit margin %  (116.4).    (37.4)
Working capital (7327.4) (6007.4)

Comments

Post a Comment

Popular posts from this blog

2018: TWO BLOWS TO UNITED CAPITAL PLC.

When a child who in a previous examination scored 80%, comes home with a new report in which he now scores 67.2%, the parents have a right to sit him down and ask how come. So it must be between Nigeria's United Capital Plc and its discerning shareholders since the release of the company's 2018 audited figures. In 2018, all said and done, says the annual report, United Capital ended with 67.2 % profit margin compared to 80.2% in 2017. How come? What comes across from the figures was that the company received 2 blows to the jugular in 2018: Sharp drops in Investment income and fair value gain. Investment income dropped by 10.8% to N4422.8m from N4965.2m while fair value on financial assets plunged by 79.7% to N6.173m from 2017's N30.387m. In view of both drops, the group's gross earnings grew by only 33.9% to N9259.4m despite strong growths in net trading income, and net operating income leap to N757.5m from N143.5m  Other income streams ended with single digit increase....
Read more

KENYA AUCTIONS Ksh 13.84bn Treasury Bonds.

The Central Bank of Kenya (CBK) will from Tuesday December 18 to 27th 2018_ auction Ksh 13.84bn worth of fixed income Treasury Bonds with issue date December 17, 2018. According to official statement from the Director of Financial Markets Irene Njiru on Monday December 17, auction will continue throughout the stated period or close once the target money to be raised is reached, whichever comes first. Bid value will be paid for at most by 2pm December 31, 2018 while auction results will be made public on December 28, 2018 after the scheduled closing date. The bonds are being issued at 12.502% fixed interest at an adjusted average price of Ksh 100.468 for Ksh 100 bond. However, price payable after auction results publication will be average of successful bid prices based and allotment will be on first come first served basis. Meanwhile, the monetary operations and debt management department has released the interest payment schedule for 13 Treasury Bonds due January and February 2019. Th...
Read more

NAIROBI SE's HIGH PRICED EQUITIES.

In the wake of Nigeria's high priced quoted companies posted in this blog a while ago, Henates took a look to at Nairobi Securities Exchange June 23 official list to identify its high priced equities and the outcome was interesting too. Of the 66 companies quoted on the market by June 23, 15 or 22.7% were valued averagely at above 30 times nominal value. A word of caution though: There are two clear differences between the Nigerian stock market list and that of Nairobi: In the Nigerian one most listed companies have par or nominal value of N0.50 as is there is an implied agreement on this. On the other hand, at Nairobi most of the equities do not share common par value, they differ greatly. Then another thing, Nigerian equities are not valued below par, Nairobi ones can and many are so valued. Of the top 15 high priced equities at the Nairobi market, Safaricom topped with because by June 23, at 23.25 Ksh average price, it was valued 465 times its nominal value of just 0.0...
Read more