Bamburi Cement reduces half-year dividend

Bamburi’s profit was affected by a drop in construction activities.

Bamburi Cement has cut its dividend to shareholders for the first time in four years, as profits fell by 36 per cent to Sh1.8 billion in six months of trading.

Half-year results for the period ending June 30, 2017 saw the listed firm’s turnover drop by Sh1.6 billion - 8.2 per cent - to Sh17.5 billion as construction activities dropped.

“The business in Kenya experienced a difficult environment characterised by a contracting market, low private sector investment resulting in slump in construction activity especially in the individual home builder segment,” said Group Managing Director Bruno Pescheux.

Bamburi’s business in Uganda, however, enjoyed good performance in both domestic and export markets.

Overall, group operating profit dipped by 37.5 per cent from Sh4.1 billion to Sh2.7 billion. This was due to lower revenues, higher global coal prices and increased power costs as a result of drought.

The management, thus, recommended an interim dividend of Sh2.50, being 58 per cent lower than the Sh6 that Bamburi has consistently paid for six months since 2014.

Earnings per share, a measure of how much money a company is making for its shareholders, also dropped from Sh7.15 to Sh4.39.

Previous company filings show that the firm, whose major shareholders are Fincem Holdings and Kencem Holdings with 29.3 per cent stake each, paid Sh1.50 per share in 2010 and increased the payout to Sh2 in 2011, retaining it until 2014.

“We expect volume sales in Kenya to grow one per cent year-on-year and prices to remain stable, especially considering prices have eroded nearly every year over the past five years,” said Standard Investment Bank (SIB) analysts in a comment on the results.

Despite the drop in profits, Mr Pescheux believes that the Kenyan market will rebound in the last quarter while the Ugandan market will maintain steady growth.

The group plans to expand its grinding capacity in the two countries by 1.8 million tonnes and hopes to commission the project by mid next year.