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Portland Cement looks to land sales to fund turnaround

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World Cement,

According to the latest Reuters report, East African Portland Cement aims to sell land and lose 1000 workers to cut debt and try to revive its fortunes after its market share plummeted.

Portland, 52% owned by the state, was found technically insolvent in a November report, because its liabilities outstripped assets.

However, board chairman Bill Lay announced that Portland owned 15 000 acres of land near the capital Nairobi and said it was worth more than the 10 billion shillings (US$98 million) needed to finance a turnaround for the company.

The company reported a pretax profit of 3.7 billion shillings for its year to the end of June but that was mainly due to valuation gains on its assets like land. It lost 1.5 billion shillings from operations during the period.

Portland owes 6 billion shillings to local banks, as well as other debts that include a yen-denominated loan.

Lay said the company planned to spend 2 billion shillings on the voluntary early retirement of 1000 workers once funds became available.

The company, more than 40% owned by Swiss building materials manufacturer LafargeHolcim, has seen its market share plunge by half in the last three years, to just 12%, weighed down by high costs and nimbler rivals who have invested in new technology.

Portland competes with Bamburi Cement, ARM Cement and three other companies. Its shares are down 54% this year.

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