Africa-Press – Tanzania. TANGA Cement has issued a cautionary notice saying its operating profit before interest is expected to drop by 225 per cent in six months to June.
The listed cement maker at Dar es Salaam Stock Exchange (DSE) attributed the loss to a clinker-making machine that forced the firm to purchase 117,259.19 tonnes last year. Orbit Securities Head of Research and Analytics, Mr Imani Muhingo said the clinker machine breaking down was a huge setback for Tanga Cement recovery path.
“The clinker issue is a big setback for Tanga’s recovery path. The firm in the last three years since 2018 was posting positive operating profits. “…We did expect this year the firm to post the first profit, however, the clinker issue came in-between,” Mr Muhingo told ‘Daily News’ yesterday.
Tanga Cement which trades as Simba Cement was making losses in the past recent years despite posting operating profit debt-paying obligation that chews up revenues. Yesterday, the firm share on the Dar es Salaam Stock Exchange (DSE) was trading at 535/- a piece.
The firm said the operating loss is expected to be between 200 per cent and 225 per cent lower than that achieved in the comparative period ended last June.
“The breakdown and subsequent repair of our major clinker production unit in February 2021 is the main driver for the decrease in financial performance,” Simba cement said.
The firm also expects its loss per share to be between 120/- and 127/- per share, being between 45 per cent and 55 per cent lower than its loss per share of 82/- per share for the six months to last June.
“To sustain the cement production and supply to our customers in the country, the company had to purchase 117,259.19 tonnes of clinker, which substantially increased the cost of production,” the Tanga-based cement manufacturer said.
The clinker purchasing contributed to an increase in the cost of sales by 28 per cent, to 89.2bn/- from 69.9bn/- reported in the comparative period last June.
“Following the significant maintenance and repair work completed, management is positive about the sustainable performance of its entire plant to yield the desired product for the future,” Tanga said.
By DSE rules, companies are required to publish a cautionary notice as soon as they are satisfied that the financial results for the period to be reported upon next will differ by at least 25 per cent from the corresponding period.
