The Tanga Cement Company projects a positive business outlook this year but repairs on its kiln, uncertainties brought by poor economic growth prospects and competition are expected to eat into the firm’s profit.
The company hopes to spend $6 million (about Sh9 billion) on repairing its kiln.
In March, the company which trades as Simba Cement, announced a dividend of Sh10.633 billion after posting a net profit of Sh32.19 billion in 2010 – higher than Sh30.42 billion profit the previous year.Managing director Erik Westerberg said the company was likely to grow in 2011 despite a host of business challenges.
“We hope the entire cement market will grow by up to 10 per cent and I hope Simba Cement’s growth will be a little higher than the growth of the total market,” he told the company’s annual general meeting here at the weekend.
“Competition is expected to increase especially due to cement imported from Pakistan. The reduced economic growth prospects and repair work on our kiln will also have an impact on our profitability.”With the International Monetary Fund revising Tanzania’s economic growth prospects for 2011 downwards from 7.2 to six per cent, Simba Cement belives that will also be affected.
The company also has to contend with unreliable power supply as well as with poor transport systems, coupled with congested ports and expensive inland transport costs due to an overreliance on road transport.“Despite these challenges however, we still bank our hope on a modern production facility and a well-trained workforce,” he said.
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