Tanga Cement Group Plc, manufacturer of the popular Simba Cement brand, recorded a net profit of $ 1.5 Million (TZS 3.5 billion) in 2021 compared to net loss of TZS 2.1 billion in 2020.
This is according to Group’s audited results for the financial year ended 31st December 2021.
The Group’s sales revenue increased by 9%, to TZS 231billion from TZS 213billion achieved in 2020.
“With Tanzania remaining a significant player in the East African construction market, cement output is anticipated to increase, and Tanga Cement is well positioned to take advantage of the growth opportunities in the regional market,” said Lawrence Masha, Chairman of the Board-Tanga Cement Group.
Congruent to the increase in revenue, Tanga Cement Group gross profit also increased by 14% to TZS 61.7billionn from TZS 54.2billion achieved in the prior year.
The gross margin increased to 27% compared to 25% in 2020, despite major plant maintenance projects undertaken in 2021 and numerous electrical power dips and power outages which increased the costs of production.
Tanga Cement Group incurred some once-off restructuring expenses during the year which resulted in a 13% decrease in the operating profit to TZS 15billion in 2021 from TZS 17billion in 2020.
These expenses mainly relate to the derecognition of the kiln shell section which was replaced, and associated maintenance costs incurred to stabilize the production process.
The rationalization of the quarry mining operations to a more cost-effective outsourced solution also contributed to this once off increase. The Group recorded a profit before tax of TZS 3.8billion in 2021 compared to the loss before tax of TZS 0.63billion in 2020.
The increase in profit before tax was mainly due to the increase in gross profit and decrease in foreign exchange and fair value losses which mainly relate to the USD denominated term loan for the construction of the Kiln2 expansion project and the interest expense on lease liabilities.
Tanga Cement entered into a standstill agreement on PIC term loan facilities which contributed to prevention of realized foreign exchange losses. Improved treasury management including but not limited strict control over working capital has also contributed positively to the results.
The Group did not declare interim or final dividends to shareholders in 2021 and 2020 respectively in what the board said is a decision to remain prudent with available cash resources in order to remain sustainable through the global economic recovery post COVID-19.
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