NAIROBI, KENYA, MAR 12 — ARM Cement has warned that its earnings for the year ended December 31, 2017 is likely to fall 25 per cent below the previous years’, joining the growing list of listed companies which have issued profit warnings
This means the company is likely to record an after tax loss of at least Ksh3.5 billion, from Ksh2.8 billion loss recorded in 2016.
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In a profit warning announcement on the Nairobi Securities Exchange, the cement manufacturer has blamed among others, the ban on coal imports by the Tanzania government for affecting its earnings.
“The group’s performance has been adversely affected by difficult market conditions and import ban for coal in Tanzania, by prolonged and disruptive elections in Kenya as well as a strain on the group’s working capital,” the firm said on Monday.
“The board of directors also anticipates negative year-end provisions for contingencies and impairments of inventories and assets,” it added.
Tanzania banned the importation of coal in 2016 as the government sought to protect its own mines, with the East African nation targeting to produce at least 5.5 million tonnes of coal annually by 2020, up from the current 100,000 tonnes.
Tanzania, whose mining sector makes up more than 50 per cent of the country’s total export is targeting Kenya and Somalia as key export markets.
ARM is the manufacturer of the Rhino brand of cement.It posted a Ksh2.9 billion loss in 2015.
The company’s board has however said the group is on track in executing its turn-around strategy with disposal of non-cement activities and strengthening its balance sheet through equity injection and debt restructure initiatives that are at an advanced stage.
“ARM is in positive discussions with its lenders and has concluded an agreement with its two major shareholders for certain financial support. As such, the board is optimistic that the business of the group will improve in 2018,” It said.
The Nairobi Securities Exchange listed firm has warned shareholders and potential investors to exercise caution when dealing in its shares.
Other firms that have issued profit warnings for 2017 include TransCentury, Insurance group Britam Holdings (Plc), HF Group, Deacons, Flame Tree , Mumias Sugar and Unga Group.
