Circle Cement, which was forced to suspend operations in February because of lack of coal, made a net loss of $862.3 million last year, down from a profit of $159.3 million the previous year. It sold 295 978 tonnes of cement, down from 361 500 tonnes the previous year.
The company says demand for cement was strong throughout the year and it could not meet demand, but it was crippled by plant breakdowns and price controls which kept the price of cement at July 2001 prices until April last year when it was granted a 50 percent increase.
The increase was meaningless since inflation at the time was 100 percent and rose to nearly 200 percent at the end of the year.
Cement sales totalled nearly $3 billion, up from $2.2 billion the previous year but the cement division had an operating loss of $1.2 billion due to low real cement prices.
Other divisions on the other hand saw their sales nearly double from $427.3 million to $762.4 million with operating profit increasing nearly five-fold from $75.2 million to $352.5 million.
Despite the gloomy picture, the company says it will continue with its operations and may have to transport coal by road.
It says it has obtained local funding for the short and medium term needs of the company. It has also obtained foreign funding of US$3 million from Citibank and Standard Chartered.
The government has since reviewed the price of cement so the company’s results for the half-year to June should indicate whether the company will turn around.