The year 2009-Results showed the positive result of our efforts to reduce a costs while
confronting an versupply on the local market due to additional production capacities
as well the growing trend of cement imports into Tanzania. The cement demand in
and around Dar es Salaam did grow substantially, however Tanga Cement’s core market
consumption of cement in the northern region of Tanzania did shrink by 3%. As a result,
our net sales revenue was kept constant on the same level of 2008, with operational profits
up by 5%.
The new cement mill and packing plant was commissioned in November 2009, achieving a
successful completion of that expansion phase well on time, within budget and delivering
the expected production performance. With that expansion Tanga Cement Production
Capacity has reached 1.25 million tons per annum.
The removal of the suspended duties on cement resulted in an increased importation of
cement into Tanzania which, due to the subsidies on cement from exporting countries like
Pakistan combined with the global oversupply and the collapsed sea freight rates, allowed
cement to reach our markets at a substantial lower cost compared to local production. In total
250,000 tons (2008: 120,000 tons) of cement were imported in 2009 which represents a
market share of 12%.
Achievements in 2009:
- 706,000 tons of cement produced and sold
- Growth of operational profit by 5% despite increased competitive situation and
economical crisis in our core market region.
- Successfully completed the expansion phase of the Tanga Plant with commissioning
of the new cement mill and packing plant towards the end of the year.
- Obtained certification of ISO 9001 – 2008 demonstrating Tanga Cement’s clear
commitment towards quality products and processes
- Again an excellent result on Occupational Health & Safety with only one minor
accident during 2009
Challenges in 2009:
- Supply of electricity from Tanesco has further deteriorated and we need to support
our production frequently with the installed back-up generators, which does increase
our cost of production.
- Our distribution of cement via rail came to a complete standstill with the reduction
of services from TRL. Practically all of our products to the Lake Zone need to be
transported via road at a substantial higher cost.
- Dumping of subsidized cement, mainly from Pakistan based on the removed
suspended duties is having a big impact on our margins and volumes sold. Due to
the unpredictability of policies in place to protect local industry, further expansion
projects have been stopped for the time being.
Future Prospects:
Despite the global crisis Tanzania did experience a good growth of construction activities
in 2009 and we project this to continue, especially in an election year. Volumes and
margins will be further affected by the imports and it will depend very much on the policy
makers to what extent the local manufacturing of cement will grow or not. Tanga Cement
Company Limited with its Simba brand is in a good position with modern plant and,
subject to availability of electricity, will be more than able to meet its customer needs not
just in Tanzania but also in other East African countries.
Juerg Fluehmann
Managing Director
