Bamburi Cement profit dips on slowed cement consumption
By Macharia Kamau | May 9th 2020
Cement manufacturer Bamburi has reported a 37 per cent drop in profit for the period to December 2019.
The firm attributed the dip in earnings to reduced local cement consumption, low prices and inability to access the Rwandan market due to the closure of the border with Uganda.
The firm yesterday said it made Sh359 million as net profit for the year, down from Sh572 million in 2018. It does not plan to pay dividends to shareholders.
Its revenues dropped by 1.2 per cent to Sh36.79 billion in 2019 from Sh37.26 billion the previous year due to factors, including a slowdown in the construction sector, following the completion of the Standard Gauge Railway Phase 2A.
A tiff between Uganda and Rwanda resulted in the closure of the border, denying Hima Cement – its Ugandan unit access to the Rwandan market early last year. The firm had also been banking on the commencement of the SGR Phase 2B to Kisumu which was however suspended, adding to the firm’s woes.
Group Managing Director Seddiq Hassani stated that Bamburi Cement and Hima Cement remained resilient despite the challenging economic conditions in the region. “Despite market challenges, including the absence of sales to Rwanda through Hima, the shelving of major infrastructural projects such as Phase 2B of the SGR project, contraction of the Kenyan market and price erosion fuelled by aggressive competitive pressure; both Bamburi Cement and Hima Cement grew share while sustaining respective market leadership,” he said.
“The group’s turnover at Sh36.8 billion was comparable to 2018 performance, an indication of our underlying competitive resilience.” Cement production in Kenya dropped to 5.9 million tonnes in 2019 from 6.1 million tonnes in 2018.
Consumption also declined by about 2.5 per cent. Bamburi’s profit was also affected by higher finance costs, which more than doubled to Sh359 million in 2019 from Sh155 million in 2019.
The firm remains cautious in the wake of the Covid-19 pandemic.
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