During the fiscal year ending in June 2023, EAPCC’s revenue experienced a notable increase of 37.8%, reaching KES 3.0 billion, marking a significant improvement from the KES 2.1 billion realized in 2022.
This growth can be attributed to the successful completion of the first phase of a plant refurbishment in September 2022, aimed at enhancing the company’s production capabilities and efficiency.
However, despite this revenue increase, the company failed to achieve profitability. The comprehensive loss for the fiscal year ending in June 2023 amounted to KES 2.4 billion, in stark contrast to the KES 569.2 million profit recorded in 2022. This financial challenge was attributed to a strained working capital position, as well as the ongoing devaluation of the Kenyan Shilling, which depreciated by 22.4% against the US Dollar year-to-date.
The currency devaluation has led to higher energy and operational costs for many businesses in Kenya, impacting profitability. The volatile exchange rates have consistently posed a challenge to companies operating in Kenya, necessitating the implementation of robust risk management strategies to mitigate currency-related risks.
Additionally, EAPCC’s earnings for the year were negatively affected by reduced gains in asset value. The Fair Value Gain on Investment Property for the fiscal year ending in June 2023 plummeted by a significant 73.9% to KES 644.5 million, down from KES 2.5 billion in 2022. This decline coincides with ongoing land disputes in Athi River, where EAPCC is seeking to regain possession of properties from squatters.
Consequently, the Board of Directors overseeing EAPCC did not recommend the payment of dividends to investors, underscoring the challenging operating position characterized by diminished earnings.
The difficulties faced by EAPCC reflect a broader trend in the Kenyan business landscape, where external economic factors and internal operational issues have made it increasingly challenging for companies to deliver robust financial results and dividends to their investors.
Incorporated in 1933, the East African Portland Cement Company (EAPCC) is a prominent cement manufacturer in Kenya, holding a 15.1% share of the local market as of 2016. This places it in competition with other firms such as Mombasa Cement Limited (15.8%) and Bamburi Cement Limited (32.6%). Nonetheless, EAPCC has recently encountered challenges as it strives to compete within the ever-demanding Kenyan economic landscape.
