TANGA Cement, trading as Simba cement, is gradually climbing to recover after cutting down losses in first half of this year.
The firm, listed at Dar es Salaam Stock Exchange (DSE), announced an 88 per cent improvement income after tax, from a loss of 14.6bn/- in the first half last year to a loss of 1.8bn/- same period this year.
Tanzania Securities Limited (TSL), a brokerage firm, said yesterday on its commentary that Simba was "gradually climbing to recover" in the six months to June.
“The 88 per cent improvement in the bottom line may be a sign that the company is slowly starting to recover….This led to the reduction in the loss after tax.
“However, the fact that supply of cement is currently greater than demand is likely to increase competition and price wars,” Tanzania Securities said in the commentary.
Overall, according to brokerage firm, the company reported improvement in profitability shown by an improvement in the margins.
During the first half, Simba cement revenue increased by 25 per cent to 99bn/-, while gross profit increased by 85 per cent to 25bn/-.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) improved by 218 per cent to 16.2bn/- in the comparative period driven by improvement in sale volumes and market prices.
Operating profits increased to 6.7bn/- from an operating loss of 4.3bn/- which was an improvement of 256 per cent. The company had a financial cost of 8.5bn/- which led to the loss of 1.8bn/-.
However, the brokerage firm cautioned that given the challenging economic conditions and the fact that Simba is also servicing a debt it used to expand its clinker production may see profits being put under pressure.
But the current industrialisation drives of the government may likely to increase demand of the cement for construction of industries.
Orbit Securities said in its weekly financial synopsis that Simba cement reported ‘a breath of life’ but the net loss led to an 88 per cent drop in the loss-pershare to 28/- from TZS 232/-.
The cement financial turbulence resulted into seeing its share price dropped to 1,000/- yesterday from 1,200/- at the beginning of the year.