With the new Tanga Kiln two (TK2) coming on line in 2016, Tanga Cement Plc will be well positioned to address the growth in demand as well as the challenges brought by new competitors in the market.
With a significantly lower cost base, the Tanga Kiln two (TK2) allows us to sell our premium products at market friendly rates without infringing on our financial outlook.
Drawing lessons from 2015, the management of Tanga Cement Plc has also adopted new go to market strategies, which will help us to restore our market share in the coming years and regain the top line growth we have enjoyed in the past.
New CFO
The company brought on board Pieter de Jager as the new chief financial officer (CFO) after the departure of David Lee, whose contract came to an end. De Jager has extensive experience in various listed and unlisted junior mining companies throughout the African continent.
He was previously the CFO of a Johannesburg Stock Exchange listed mining and manufacturing company and has significant experience in corporate finance and mergers and acquisitions.
We intend to leverage off his expertise and experience for sound financial controls and decision making towards delivery of Tanga Cement Plc promise of sustainable business practices to maximise returns for our shareholders.
The addition of De Jager to Tanga Cement management team contributed significantly to the company’s improved results from the latter half of 2015 going forward.
2015 Operational Dynamics
The year 2015 presented operational dynamics that offered vital lessons to our progress going forward. 2015 saw the entry of new competitive products in the market, which resulted in downward pressure on our sales prices and volumes.
Sales were further compressed by external factors such as increased electricity supply interruptions and frequent power dips, which caused significant operational challenges such as premature kiln refractory lining failure.
As a result the company saw sales revenue for the 12 month period ended December 31, 2015, decrease by nine point nine (per cent compared to the same period in 2014.
To address the instability owing to power failures, the company resolved to purchase more expensive clinker from abroad. The purchased clinker while initially increasing the cost of production, ensured uninterrupted cement supply to the market, which supports the long term return on investment.
In spite of a seemingly challenging environment, we were able to revamp operations and successfully started final commissioning tests of the new kiln line (TK2) project.
Financials
Tanga Cement was able to record an operating profit of 19.9bn/- compared to 39.8bn/- in the previous year and net profit after tax of 8.2bn/- outperforming the forecasts of a full year loss, based on the trading results of the first half of 2015.
This was achieved by implementation of various measures, which resulted in a positive 19.9bn/- operating profit reported for financial year 2015.
Furthermore, Tanga Cement Plc was able to pay out an interim dividend of 55/- per share or 3.5bn/-, and has declared a final dividend of 25/- per share. This brings the full year dividend to 80/- per share or 5.1bn/- for the financial year under review.
The dividend pay-out is a reinforcement of management’s belief in the operational fundamentals and financial position of the company, while recognising the value invested in it by our shareholders to create a sustainable business.
Implementation of our world class Corporate Social Responsibility mission allows us to unconditionally support communities throughout the country.
While our main focus areas include education and health by developing social infrastructures we are also reaching out to flood victims and children in need.
During the period under review, Tanga Cement Plc won the 2015/2016 Super Brand title in the construction industry category of Super Brand East Africa, within the East African Community.
This accolade is a recognition of work done by the management and employees of Tanga Cement Plc in their consistency to ensure superior performance to our customers as well as the provision of superior quality products.
Reinhardt Swart is the managing director of Tanga Cement. This paraphrased article is his statement in the company’s 2015 annual report.
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