AshakaCem posts N2.4bn profit in 2009
Speaking yesterday in Abuja at the company’s 35th Annual General Meeting (AGM), the chairman said the profit before tax and turnover went down from N3.4 billion and N21.4 billion in 2008 respectively.
Gross profit to turnover reduced from 35 per cent in the previous year to 32 per cent in 2009 while profit before taxation to turnover dropped from 15 per cent in 2008 to 14 per cent in the year under review.
The chairman said that despite the modest profit recorded, the board approved a bonus issue to shareholders of one share for every eight shares held.
The chairman said Nigeria as a country and the cement industry in particular have suffered from the Global Financial Crisis which significantly affected the results of the company in 2009.
He said: “Nevertheless, we have made substantial progress with our coal project which is expected to significantly reduce our expenditure on fuel oil (LPFO) and in the long run improve our profitability. The expected gradual improvement worldwide and also the Nigerian economy give us confidence that our financial performance will significantly improve in coming years.”
He added that crisis in the Nigerian banking sector together with some other factors impacted negatively on cement market demand, particularly in the second half of the year.
He said that as a result of the weaker demand with continuing massive cement importation in the preceding year, their sales volume was reduced from 677kt in 2007 and exceptionally high of 866kt in 2008 to 647kt in 2009.
Brig. Ikwue said despite the challenging market situation, it was necessary to increase selling price from N24,700 per ton to N26,600 per ton to particularly mitigate the very high fuel and power price increase experienced after the oil sector deregulation.
In his review, the Managing Director of the company, Engr. M. M Daggash, said despite the difficulties, the company was able to operate profitably as they were compelled to pass some of the cost to consumers in the form of increase in selling prices.
He said the global economic recession and the Federal Government’s decision to scale down its capital projects had profound implications for the price of cement and the company’s profitability.
He added that despite all the challenges, they held up very well and remained sold out throughout, adding that they have improved on service delivery and customer satisfaction by changing their distribution strategy towards more self collection dispatches with attendant advantage of better profitability.