Athi River Mining (ARM) Cement, a leading Kenya-based manufacturer, was the top gaining stock on the Nairobi Securities Exchange (NSE) for the second consecutive week after edging upwards by 27.9%.
According to Market Analysts from regional financial services firm, Amana Capital Limited, this was due to increased demand by local investors.
The share price closed at Ksh3.90 ($0.04) last week from the previous week’s close of Ksh3.05 ($0.03).
Amana Capital, which deals in Unit Trusts, Wealth Management and Pensions, noted that despite its current performance, the company has been facing some financial troubles.
“Year-to-date, ARM Cement stock price has lost 70% of its value as a result of continued losses and a turnaround plan which remains in limbo,” explained Amana Capital Limited Investment Analyst, Kevin Mwangi in a statement issued on July 9th, 2018.
ARM Cement is one of the largest manufactures of cement in Eastern Africa. The firm accounts for an estimated 2.6 metric tonnes of cement produced annually. ARM has operations in Kenya, Tanzania, and South Africa and manufactures a number of products, including cement, fertilizers, quicklime, hydrated lime, sodium silicate and other industrial minerals.
As of December 2013, the company’s total assets were valued at $340 million.
In early June, 2018, the company announced it had reached an agreement to sell its fertiliser and mineral production businesses in Kenya to Swiss firm Omya and Pinner Heights Limited (PHL) for Ksh1.6 billion ($16 million).
At the time, ARM also disclosed in its latest annual report that the buyers could also acquire its non-cement operations in Tanzania for free in what is seen as an effort to close the deal, which was still pending as of May.
At the end of June, 2018, ARM admitted that it has been unable to make money from a clinker plant in Tanzania in which it sunk billions of shillings three years ago.
The Tanga Plant was supposed to produce 1.2 million tonnes to serve the Tanzania, Kenya and Rwanda markets but has instead driven the company into a Ksh6.9 billion ($68 million) loss.
In a public announcement issued towards the end of June, the company’s board apologized to shareholders and trade partners. The board blamed the capital expenditures for the money woes at the firm.
The firm is now set to announce the way forward for the business in the next few weeks. ARM has also asked for stakeholder support as the board makes moves to rectify the situation.