East African Portland Cement profit after tax drops 68.6pc to Sh1.58bn

East African Portland Cement Company's (EAPCC) profit after tax dropped 68.6 percent to Sh1.58 billion in the financial year ending June 2026, compared to Sh5.02 billion in the previous year. This decline was primarily due to a significant reduction in gains from investment properties and a shift in operating performance to a loss, caused by increased production costs and expenses tied to the company's reorganization efforts.

The cement producer experienced a 66.1 percent decline in profit before tax, from Sh5.53 billion to Sh1.88 billion, and earnings per share decreased from Sh55.82 to Sh17.55. Fair value gains on investment properties also fell by 50.9 percent, from Sh3.90 billion to Sh1.91 billion, contributing less to the company's overall profitability.

Although revenue increased by 28.1 percent to Sh9.07 billion due to a 30 percent rise in cement production and a 29 percent increase in sales volumes, the gross margin narrowed by 1.1 percentage points as higher energy and logistics costs drove up production and distribution expenses. The company cited elevated inflation and supply chain disruptions stemming from geopolitical tensions as factors contributing to the challenging operating environment.

Net cash used in operations amounted to Sh321.3 million, a decline from Sh242.7 million the previous year, and cash and cash equivalents decreased by 5.2 percent to Sh648.6 million, despite a 3.3 percent rise in total assets to Sh51.96 billion. EAPCC has not recommended a dividend for the year, choosing to conserve cash for potential capacity expansion.

The company plans to enhance plant efficiencies, optimize sourcing, and pursue capacity expansion to capitalize on anticipated growth in cement demand and infrastructure projects.