Bamburi Cement has issued a profit warning, indicating that its profit for the year to December 2022 will fall by at least 25 per cent.
The cement maker said it has been hit by reduced demand for the product in the market on account of the August general elections that had a toll on businesses locally this year as well as higher cost of imported raw materials as well as the cost of shipping them in owing the Russia-Ukraine war.
The company also said electricity in Kenya has had the impact of pushing up its cost of operations.
“The board wishes to inform shareholders of the company, potential investors and the general public that based on the forecasted 2022 financial performance of the company currently at the board’s disposal, the project earnings for the financial year 2022 will be lower than net earnings reported in the financial year 2021 by at least 25 per cent,” said the company in a statement yesterday.
“The expected decline in earnings is largely attributable to a slowdown in market demand for cement, high cost of energy coupled with increased raw material costs due to global disruption of the supply chain.”
The impact of the harsh economic times was evident in the company’s half-year earnings when it posted an 87.8 per cent decline in net profit for the six months to June this year.
The company in August said its net income over the period dropped to Sh95 million from Sh776 million in a similar period last year.
Then it said that inflation of fuel prices, logistics costs and importer clinker prices had adversely affected its earnings. It was also impacted by foreign exchange losses as the shilling weakened against major world currencies.
The company reported a 22.2 per cent increase in net profit in 2021 to Sh1.38 billion from Sh1.13 billion in 2020, attributing the performance to a higher volume of cement it sold to the market as well as higher retail prices, especially for its premium products as well as cost-cutting initiatives and increased efficiencies.