East African Portland Cement has converted part of a yen-denominated loan into dollars to reduce its exposure to foreign exchange losses following a surge in the Japanese currency, a newspaper reported on Tuesday.
Ranked as the No.2 cement maker in Kenya, Portland's earnings have been hurt for three straight years by huge foreign exchange losses, after the global financial crisis of 2008 sent the yen on a sharp ascent.
Business Daily quoted Portland's Managing Director, Kephar Tande, as saying the firm swapped a quarter of its 3.6 billion shilling ($38.5 million) loan for dollars from yen in the first half of 2011, before converting another 25 percent tranche of the total in July, in a deal arranged by a local commercial bank.
The volatility in the exchange rate between the shilling and the dollar had been lower compared with that between the shilling and the yen, Tande told the newspaper, meaning that the foreign exchange losses had been cut by 100 million shillings since the swaps.
The firm lost of 119.06 million shillings ($1.30 mln) in its year ended last June after a loss of 338.57 million shillings in the year earlier period, after a higher unrealised foreign exchange loss offset an 8 percent growth in sales revenue. ($1 = 93.375 Kenyan Shillings)
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