East African Portland Cement issues profit warning on negative working capital

Cash-strapped East African Portland Cement Company (EAPCC) NSE:PORT,  has issued a profit warning for its full year earnings compared to the year ended 30th June 2018.

“The expected decrease is mainly attributable to increased input prices, a sluggish market as well as production challenges arising from a tight working capital position which affected the company’s ability to effectively serve its customers,” Sheila Kariuki, Company Secretary said.

This is based on on the unaudited results for the period to 31st December 2018, factoring in forecasts to the end of the year and the preliminary evaluation made by the board with reference to figures and information currently available.

In the results, its losses have widened by 30.7% to KSh1.26 billion in six months to December 2018.

In 2017, its loss was up from KSh969.5 million reversing its June 2018 full-year profit of KSh7.79 billion attributed to booking KSh11.34 billion gain on land revaluation.

Currently, it is stuck in negative working capital with obligations maturing within the next 12 months outstripping current assets by KSh7.3 billion.

However, the firm has the potential to stand bounce back if  it gets at least KSh15 billion to stay afloat,

Trade and Industrialisation Cabinet Secretary Peter Munya said the Government had already started laying the groundwork for the revival of the company, including the change of management and modernising its ageing plant in Athi River.

“We as the Government are keen on reviving EAPCC and we have carried out due diligence on the existing loopholes leading to the losses,’’ said the CS  on Monday.