East African Portland Cement Company (EAPCC) #ticker:PORT spent Sh281.9 million to fire an estimated 150 employees in the half year ended December 2019.
The redundancy costs contributed to a rise in the company’s expenses, widening its net loss 24.4 percent to Sh1.5 billion compared to Sh1.2 billion a year earlier.
The move to reduce the workforce to 600 and at a reduced pay is part of the Nairobi Securities Exchange-listed manufacturer’s plan to rein in its losses amid sluggish revenue growth brought by reduced production.
The company’s revenue grew eight percent to Sh1.4 billion but expenses including finance costs and the terminal benefits rose much faster, resulting in the loss.
“The company continued to stabilise on its restructuring agenda with utmost focus to effectively serve its customers efficiently,” EAPCC said in a statement.
Chief executive Stephen Nthei recently told the Business Daily that the company had sacked 150 employees in administrative roles, adding that the retrenchment will soon move to other job cadres.
He added that the board wants to cap payroll costs at 35 percent of the sales revenue and also limit administrative costs at a third of total workforce costs.
“The bottom-line is to get a lean workforce at a reduced cost of labour. We are not turning back. We prioritised top management and we have handled about 150 people so far,” he said.
“What we are doing is to pick a particular category of staff and give them redundancy notices of one month, which is specific to them.”
The dismissed employees are then subjected to a suitability assessment to evaluate whether they qualify for the recalibrated jobs.
This will see an unspecified number of workers exit given the management is favouring a workforce of not more than 600.
EAPCC has been shedding jobs over the years as performance waned. At the close of June 2017, it had 1,265 employees. Trimming the workforce to about 600 will mean that in under two years, 665 jobs will have been shed.