Tanzania Daily News (Dar es Salaam)

Tanzania: TOL Makes U-Turn in Profitability

TOL Gases has recorded the first profit after five consecutive loss years, signalling that the industrial and hospital gas manufacturer heads towards profitable era.

TOL, the only industrial and medical gases producer in the country, rose from the red to make a pre-tax profit of 410m/- last year compared to 1.5bn/- loss posted in 2010. The firm said in its financial statement that gross profit jumped by 188 per cent to 2.18bn/- from 756.79m/- while other income sources generated about 670m/-.

TOL, the first firm to list on the Dar es Salaam Stock Exchange (DSE) in 1998, managed to control operating costs that increased by a mere four per cent to 2.097bn/- from 2.018bn/-. Zan Securities Chief Executive Officer Raphael Masumbuko said that he has long been telling investors that management change could turn the loss making firm into profitability as long as its products are marketable.

"This (profitability) is good news to the market," Mr Masumbuko said, adding: "It shows that with good management profit is always achievable."

The results, although showing that no dividend is likely to be paid, are encouraging to push further for the firm's share demand. "The profit attained, I am sure, will not lead to pay dividends because the company has many obligations to look at," said Mr Masumbuko.

The firm financial statement shows that total liabilities at the end of last year stood at 8.78bn/- an increase of 24 per cent from the previous year. Anticipations are that share demand will increase and push up share price from the current 200/-, which is below the initial public offer price of 500/- per share. The new results bring back shareholders' hope that the company remains sound after many years of poor performance.

TOL only posted profits of 102m/- and 293m/- in 2006 and 2007, respectively after the right issue that boosted its capital level. In the same years, the government absorbed complicated debts of the company.

Soon after being appointed Managing Director, Mr Daniel Warungu, came up with an ambitious new strategy known as 'Mission 6:3' seeking to generate a 6bn/- profit in three years.

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