"The board has recommended a final dividend of Tzs 55 per share (2011: Tzs 47),
amounting to a total final dividend of Tzs 3.5 billion."
The past year was characterised by changing trading conditions in the
local market. Although the economy of Tanzania continued to grow
during the period under review and the macro-economic environment
was favourable, the competitive landscape presented new challenges,
with increased competition from new manufacturers as well as an
increase in cement imports.
Despite these challenges Tanga Cement Company Limited (TCCL)
posted excellent results, underpinned by a 12% increase in sales
volumes. Including a 55% increase in exports, total sales revenues grew
by 21%. The sales volume increase marks a signifi cant milestone for
TCCL, being the fi rst time the company has sold over one million tons
of cement in a single year.
I would like to commend the management and staff of TCCL for this
remarkable achievement and urge them to keep up the excellent
performance.
Macro-Economic Overview
The macro-economic environment remained positive, with high
demand for product both locally and from export markets. This despite
increased imports which are lower-priced, posing stiff competition for
TCCL’s locally-manufactured product. Our high-quality product and
strong customer base helped us to hold our own in this competitive
environment. TCCL is continuing to focus on quality and service off erings
in order to maintain market share and sales performance.
Infl ation declined signifi cantly compared to last year but remained high
at 12.1% (2011: 19.2%), while the stable exchange rate helped to contain
our import costs.
Operational Overview
Improved operational effi ciencies resulted in substantially reduced
maintenance costs. This reduction in maintenance costs was partly
responsible for the 26% increase in the company’s gross profi t for the
year. The kiln performed well during the year and experienced no major
mechanical problems, with the only stoppages being for planned
maintenance. Clinker production volumes increased by 9.6% compared
to last year, when the kiln was stopped for almost six weeks for major
refurbishment work.
Overhead costs were strictly controlled and the company’s operating
profi t for the year increased by 34%. Net profi t after tax increased by
52%.
The electricity supply improved signifi cantly compared to the previous
year. The company only had to use its own generating capacity to
produce 1.91% of its requirement, compared to 6.95% during 2011.
Transportation of product by rail was reduced by 50% due to the
declining service level available. This substantially increased distribution
costs as the company’s reliance on road transport increased.
Future Outlook
As reported in my mid-year statement, the boards of both TCCL and the company’s majority shareholder,
AfriSam, have approved the construction of a second kiln at the factory in Tanga. This will give TCCL
suffi cient capacity to produce all its own clinker requirements, eliminating the need to import clinker and
thus substantially reducing production costs in future while responding to growing demand.
Although there has been a delay in the commencement of the expansion project due to unfavourable
ground conditions encountered at the original planned site, these have now been addressed. The
new kiln has been moved to a new site and with the necessary funding fi rmly in place, construction is
expected to commence in mid-2013, with commissioning scheduled for 2015.
Once completed, the kiln will increase the company’s clinker production capability by 600,000 tons per
annum, more than double current clinker capacity. This additional capacity is expected to satisfy the
consistently high demand for cement from both the Tanzanian market and markets beyond the country’s
borders into the immediate future.
Dividends
The board has recommended a fi nal dividend of Tzs 55 per share (2011: Tzs 47), amounting to a total fi nal
dividend of Tzs 3.5 billion. This brings the accumulated dividends for the year to Tzs 100 per share (2011:
Tzs 86), a total of Tzs 6.4 billion for the full year.
Closure of Share Register
The register of members will close on 06 May 2013. The last day of trading cum-dividend will be 25 April
2013 and the fi nal dividend will be paid on or about 31 May 2013.
Conclusion
With the economies of Tanzania and the East African region forecast to continue to grow at above 6% per
annum and with the new kiln expected to start production in 2015, the company is in a strong position
to take full advantage of the growing markets in Eastern Africa.
Prof. Samuel Wangwe
Acting Chairperson
