Dar es Salaam, Tanzania - Tanga Cement Company, operating under the Simba Cement Brand and listed on the Dar es Salaam Stock Exchange (DSE), has reported a loss of TZS 2.1 billion in the second quarter of 2023. While this represents a slight improvement from the TZS 2.4 billion loss before tax recorded in the same period last year, it is indicative of the challenges faced by the cement maker.
According to the company's financial statement for the second quarter of 2023, Tanga Cement saw a marginal decline of five percent in sales revenue, which amounted to TZS 55 billion, down from TZS 58.3 billion in the second quarter of 2022.
Despite the dip in revenue, the company's gross profit showed a promising increase of 25 percent, reaching TZS 14.1 billion, up from TZS 11.2 billion in the same period the previous year. This boost in profitability is attributed to the successful implementation of cost containment strategies.
However, the financial statement also revealed that interest expenses surged by a significant 61.35 percent, rising from TZS 3.9 billion in the second quarter of 2022 to TZS 6.3 billion in the second quarter of 2023.
Tanga Cement, a subsidiary of AfriSam (Mauritius) Investment Holdings Limited with production facilities in the Pongwe area of Tanga, recorded notable improvements in cash generated from trading activities and net cash flows from operations. These improvements are credited to enhancements in gross margin and EBITDA (earnings before interest, taxes, depreciation, and amortization).
Cash generated from trading activities saw a remarkable increase of 438 percent, climbing from TZS 1.7 billion in June 2022 to TZS 9.0 billion in June 2023. Net cash flows from operations also surged by 558 percent, rising from TZS 1.4 billion in June 2022 to TZS 9.0 billion in June 2023.
Tanga Cement remains optimistic about its future growth prospects, especially with anticipated increases in cement demand driven by major infrastructure projects across Tanzania. These projects include the East African Crude Oil Pipeline Project (EACOP), the standard gauge railway, and upgrades to the Dar es Salaam and Tanga Ports.
The Group also applauds the Tanzanian government's initiatives to mitigate the effects of rising oil prices and the scarcity of major foreign currencies. Patrick Rutabanzibwa, Chairman of the Board of Directors, expressed confidence in the government's efforts and the potential for cement demand growth in Tanzania's construction industry.
"The Group is confident with the initiatives that the government has taken to combat the effects of the 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," stated Mr. Rutabanzibwa.
Tanga Cement Company is in the process of being acquired by Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which also owns Twiga Cement, another major cement manufacturer in Tanzania. However, the acquisition is currently facing legal challenges following the nullification of the Fair Competition Committee's decision to sanction the merger earlier this year. The FCC had approved Scancem International DA's acquisition of AfriSam's Tanga Cement, but the legal proceedings continue.