It is with great pleasure that we present the financial performance for
the year ended 31 December 2016. Against this backdrop of various
challenges and opportunities faced during the year under review, we
made good progress. The implementation of our strategic actions is
well advanced and our business model proved resilient and viable.
Our performance reflected results of enhanced competition in
the market, due to planned government infrastructure projects
that continues to attract new market entrants. However, industry’s
engagement with Government yielded a sharp decrease in imported
cement as the Government increased duties on cement and cement
Quality remains central in our business as proven by the recognition of
Simba Cement as a Super Brand and the company’s ISO certifications.
This extends to all areas of our business including financial reporting
where Tanga Cement was once again recognised for excellence in
financial reporting by the National Board of Auditors and Accountants.
Our top line experienced a twenty percent (20%)
percent year on year drop, with sales revenues of
Tanzania shillings One hundred sixty seven billion
(Tzs 167bn) in FY2016 compared to Tanzania
shillings Two hundred and nine billion (Tzs
209bn) in FY2015. Nevertheless, the company
demonstrated its resilience and ability to remain
operative and profitable despite the competition,
by way of adoption of sustainable go to market
strategies. The result was growth in profitability
margins and increased operational efficiency
while retaining our superior performance.
The commissioning of the second integrated kiln
and manufacturing line, Tanga Kiln Two (TK2) was
among our key achievements. TK2 was a two-year
construction project at an investment of One hundred fifty million
USD ($150 million), in line with the budget and within the scheduled
timeframe. The new production line more than doubled our clinker
and cement capacity to one million two hundred fifty tons per annum
(1.25million t/yr) making Tanga Cement self-sufficient in clinker in the
long term and providing an avenue for additional revenue from sale of
excess clinker. TK2 will position Tanga Cement to meet the anticipated
increase in future cement demand and improve the production
efficiencies through this new modern production systems.
The operational efficiencies introduced by the new integrated
production line, contributed to the decrease in our cost of sales to One
hundred twelve point five billion Tanzania shillings Tzs112.5bn, a thirty
point nine percent (30.9%) decrease from One hundred sixty two billion
Tanzania shillings Tzs162bn in the previous year. We optimised our
logistics by decreasing third party road transportation and increasing
use of rail transport to major towns, taking advantage of our direct
access to the rail line into our packing and loading bay. Our agreement
with Tanzania Railway Ltd (TRL) also allowed us to utilise more of their
wagons dedicated to Tanga Cement PLC as well as rail depots as central
distribution points, reducing our storage and transportation costs
further and consequently boosting rail transport and distribution in
Ensuring Sustainable Growth
We recognise that market dynamics keep
changing; we are adopting our strategies to suit
market dynamics while remaining cognisant of
our core business and our responsibility to all our
We will continue with the implementation of our
cost optimisation programme as well as enforcing
additional efficiency measures in production and
operations while retaining our brand reputation of
being the highest quality product.
In line with our strategic growth plans we will be
increasing our cement production capacity with
a grinding plant in the Northern region to take
advantage of the growing cement demand along
the northern corridor of Tanzania.
We continue to seek out new opportunities and innovate on our
production efficiency, product offering and distribution solutions to
supply our products to upcoming infrastructure projects.
2017 is poised to provide exciting opportunities from geopolitical
developments and increased competition.
Despite the initial delay by government in the roll-out of these projects,
we remain optimistic that they will pick up in the near future as
indicated by government.
The anticipated large infrastructure projects such as the oil export
pipeline from Uganda through Tanga in Tanzania, the Standard Gauge
Railway (SGR), Dar es Salaam and Tanga port upgrades, and an ultramodern
sports stadium in Dodoma, are anticipated to shore up the
demand for cement in Tanzania over the next five years.