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Twiga cement net profit drops

Twiga cement net profit drops

The leading cement company, which is listed on the Dar es Salaam Stock Exchange (DSE), said its net profit went up by 0.4 per cent to 50.61bn/- last year. "Higher imports of clinker and frequent breakdown of machinery resulting from the erratic power supply led to increased production costs," Twiga's Board Chairman Jean-Marc Junon said in a statement on Thursday.

Due to power woes, the firm's gross profit went down by 2.0 per cent to 100.05bn/- from 101.83bn/-. Apart from these challenges, the firm like many others in the region has been exposed to the imports of cement as the EAC member states decided for the fourth time not to re-instate suspended duties on cement in the common External Tariff.

Twiga, registered as Tanzania Portland Cement Company, said the construction sector grew moderately at around 3.0 per cent due to inconsistent of power supply that affect the country. The chairman, however, said the prospects were bright as it is forecasted the cement demand will continue to grow as several areas are still undeveloped.

"(Construction of) infrastructure, residential and commercial projects will continue to fuel the growth especially with improved power supply," Mr Junon said. To stay ahead of demand, the firm is expected to complete upgrading of clinker kiln number three by May and be at the best position to meet the ever growing demand. The firm has production capacity of 1.4 million tonnes per year.

Twiga also announced a fully year dividend of 180/- per share, of which 40/- was paid as interim dividend last year. The 2011 dividend is an increase of 29 per cent compared to 139/51 paid in 2010. "The proposed dividend represents 64 per cent of the net profit of the year," the statement said.

Orbit Securities Head of Operations and Dealings Juventus Simon said the dividend offered is likely to push the demand for Twiga's stock in the coming days.  "The 29 per cent increment is good take - we are likely to see the demand of the firm shares rise this week," Mr Simon said. Twiga's equity closed on Wednesday up by 9.09 per cent to 2,400/- each.  About 10,200 shares changed hands during the session.

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