DAR ES SALAAM: Tanga Cement Company reported a 2.1bn/- loss in the second quarter of 2023, a slight improvement from 2.4bn/- loss before tax made in a similar period last year.
The Dar es Salaam Stock Exchange (DSE) listed cement maker which trades under the Simba Cement Brand, posted a marginal decline of five per cent in sales revenue, reaching 55bn/- down from 58.3bn/- recorded during the second quarter of 2022, according to its financial statement for the second quarter of 2023.
Despite a decline in sales revenue, the company’s gross profit showed an increase of 25 per cent to 14.1bn/- up from 11.2bn/- attained in the equivalent period last year.
The increase in gross profit has been credited to the implementation of cost containment strategies.
However, the financial statement shows interest expense increased by 61.35 per cent from 3.9bn/- in the second quarter of 2022 to 6.3bn/- in the second quarter of 2023.
The cement maker which is a subsidiary of AfriSam (Mauritius) Investment Holdings Limited with production facilities in Pongwe area in Tanga recorded a significant increase in cash generated from trading activities and net cash flows from operations, attributed to improvements in gross margin and EBITDA.
Cash generated from trading activities surged by 438 per cent from 1.7bn/- in June 2022 to 9.0bn/- in June 2023. Net cash flows from operations increased by 558 per cent from 1.4bn/- recorded in June 2022 to 9.0bn/- in June 2023.
This increase was attributed to an improvement in the gross margin and EBITDA of 6 per cent and 63 per cent respectively as a result of management’s adept execution of cost management and cash‑ flow enhancement strategies.
Tanga Cement is optimistic about future prospects for growth due to anticipated increase in cement demand from major infrastructural development projects across the country which include the East African Crude Oil Pipeline Project (EACOP), the standard gauge railway and Dar es Salaam and Tanga Port upgrade.
The Group is optimistic about the positive impact of infrastructure development under government’s Development Vision 2025 and lauds the government’s initiatives to counteract oil price increases and scarcity of major foreign currencies.
The Chairman of the Board of Directors, Patrick Rutabanzibwa said in the statement that the growth outlook is tied to the growth in cement demand in Tanzania’s construction industry and opportunities available in the regional market where Tanzania is a significant player East African construction market.
“The Group is confident with the initiatives that the government has taken to combat the effects of increase in oil prices as well as the impact of the scarcity of major foreign currencies and commits to working together with the government in growing the economy,” said Mr Rutabanzibwa in the statement.
Tanga Cement Company is set to be acquired by Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which owns Twiga Cement, another major cement maker in Tanzania.
Scancem International DA signed an agreement to acquire a 68.33 per cent stake in Tanga Cement Public Limited Company from AfriSam (South Africa) (Pty) Ltd.
However the planned acquisition is subject to continuing legal twists after a tribunal judge nullified Fair Competition Committee (FCC) decision to sanction the merger at a second attempt in February this year.
The FCC approved the Scancem International DA’s acquisition of AfriSam’s Tanga Cement following a second application after the Fair Competition Tribunal (FCT) had blocked the initial application following an appeal by the now deregistered Chalinze Cement and Consumer Advocate Society.