Hima Cement, in 2018 made a loss of UGX32.5 billion, down from a profit of UGX71.7 billion in 2017, according to the company’s results, this reporter has had access to.
According to the 2018 audited company accounts, the Lafarge-Holcim subsidiary in Uganda also suffered a 9% drop in sales, from UGX537.4 billion in 2017 to UGX489.5 billion.
This is despite having opened a new USD40 million plant in Tororo, in May 2018, with a promise to increase production from 0.9 million tonnes to 1.7 million tonnes annually.
In June 2019, Nicholas George the Hima Cement CEO suddenly left the company, under unexplained circumstances, just after 16 months, to take up another job outside Lafarge-Holcim in Cambodia.
CEO East Africa Magazine has not yet established a direct link between the CEO’s exit and the poor business performance.
However, a press statement released by the company, at a function to bid farewell to the outgoing CEO and welcome Mr. Jean-Michel Pons (42), the new CEO, Barbara Mulwana the new Hima Cement board chairman said that the outgoing CEO, had helped grow sales as well as Hima Cement’s profits by 15%.
Michel Pons, joins the company from LafargeHolcim Moldova. Pons, who has been with LafargeHolcim Group since 2011, has worked in Russia, Serbia, Algeria, France and more recently Moldova. He brings a wealth of knowledge of the construction industry from his previous deployments.
This reporter, in an email, to Ms. Mulwana asked about the differences between the figures we had had access to and the said 15% growth in profits, but she did not answer back. Attempts by this reporter to also get a statement from the company’s spokesperson about the company’s performance, were futile as the promised response never came through for over 4 days.
According to results available to us, Hima Cement enjoyed good sales growth between 2014 and 2016 in which sales grew from UGX475.2 billion in 2014 to UGX550.1 billion in 2015 and UGX564.1 billion in 2016. Similarly net profits in the same period grew from UGX47.2 billion in 2014, to UGX63 billion in 2015, peaking at UGX72.5 billion at the end of 2016.
However in 2017, sales reduced to UGX537.4 billion and further to UGX489.5 billion in 2018. Net profits also reduced to UGX71.7 billion in 2017, before a tailspin tumble to UGX32.5 billion loss in 2018.
Nicolas George, the former MD responds; blames losses on past mismanagement
In response to our LinkedIn inquiry, Nicolas George clarified that he had left Hima Cement following completion of his assignment to “clean up” the business and that he had received an irresistible offer from his current employers.
“I came to Hima to clean the company following few years of mismanagement. You can easily see it if you read the annual report of Bamburi cement,’ he said, without going into more details.
“The results were negative because we had to write off a lot of things, clean the bad debts that were hidden,” he further explained, adding: “The job was done, the management team completely changed and the company is doing good in H1 2019, except for the loss of Rwanda market due to border closure.”
“My job was completed with success. Feel free to check with Hima management if you want. I left because I had completed the clean-up I was hired for and because I had been with the group for almost 15 years and I got an opportunity I could not refuse,” he said.
Both Dr. John P. N. Simba and Seddiq Hassani the Bamburi Group Chairman and Group Managing Director respectively, in the 2018 Annual Report, blamed Hima’s bad performance on rising costs of operations; namely fuel, coal and petcoke costs following global market price increases as well as slow growth in the cement market and “higher levels of provisioning.”
A provision is an amount of cash set aside from the profits in the accounts of a business to cover a known liability or to account for depreciation of an asset. This lends a lot of Credence to Nicholas George’s earlier claims of past mismanagement and cover-ups that necessitated massive write-offs.
For example, Hima Cement recently had to return hundreds of acres of community land in Tororo, Eastern Uganda, that it said had been bought in ways that contravened Lafarge Group’s known principles and in the process lost several billions of shillings. This is after Nicholas George appeared before the Justice Bamugemereire land probe committee and pledged to return the land.
Leadership cleanup at Hima Cement
Nicolas George who has since taken up a new post as CEO at Chipmong Insee a Cambodian cement company in South East Asia, became Hima Cement CEO in February 2018 replacing Allan Ssemakula, who served in an acting capacity, between November 2017 and February 2018, following the sudden departure of then CEO Daniel Pettersson over what is now believed to be compliance issues.
Much of the bad performance happened during the time Hima Cement did not have a substantive CEO and Nicolas George’s time.
Hannington Karuhanga, then board chairman has quietly left the Hima Cement board and has been replaced by Barbara Mulwana. Semakula has also since left Hima Cement and is now Enterprise Director at Airtel Uganda.
Karuhanga is also Airtel Board Chairman. Losses largely blamed on the cost of provisioning for damages caused by past mismanagement, hidden bad debts and bad procurements