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Thursday, September 24, 2020

TransCentury halves its losses to Sh. 676 million

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TransCentury Group has more than halved its losses in the first half of this year to Sh676 million despite sustained poor performance in the power division.

In a similar period last year, the firm reported Sh1.6 billion loss on poor performance in the same segment.

Despite a 25 per cent year-on-year revenue drop in the power business, turnover rose by 5 per cent to Sh5.2 billion from Sh4.9 billion in the period under review.

“This growth was attributable to the ongoing execution of major construction projects in engineering division, which commenced in Q1 (first quarter) 2015,” management said in a statement.

The power division’s revenues were substantially impacted by significant interruptions of production processes “in our copper factory due to the ongoing final phase of capacity and efficiency upgrades,” the management noted.

In the period, finance costs rose by 29.5 per cent year on year to Sh497 million as a result of higher financing charges from the power division and currency depreciation on the dollar-denominated loans the firm is servicing.

“While we had anticipated some profitability in 2015, the current numbers point to us otherwise. Financing remains a key challenge for TCL (TransCentury) with the company likely to make a cash call for the repayment of the outstanding 2011 bond maturing in 2016 (of approximately $80 million) – considering the 133.8 per cent redemption of the principal amount,” analysts at Standard Investment Bank (SIB) said.

The firm is pegging its recovery on growth prospects in the domestic and regional markets buoyed by the ongoing implementation of ambitious projects in energy and transport.

It also anticipates that the government’s policy on 40 per cent local materials requirement will specifically boost demand for its power products.

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