Bamburi Cement Group on Friday said cost-cutting and optimization initiatives helped it to deliver improved profitability for the full year ended December 2019.
The Group posted a 17 percent jump in profit before tax to KSh 0.73 billion as compared to KShs 0.62 billion in 2018.
Despite the decline in the Kenya cement market, lower selling prices and the impairment of Rwanda assets, the Group’s Operating Profit still grew by 44 percent to KShs 1.117million as compared to KSh 775million in 2018.
The increase in finance cost relates to the full-year impact of interest on debt to finance the capacity expansion project commissioned by Hima Cement Ltd in 2018.
In addition, the impairment of assets in Rwanda was necessitated by the inability of Hima Cement Ltd. to access the Rwanda market. The closure of the border between Uganda and Rwanda in February 2019 negatively impacted further growth.
Group Managing Director Seddiq Hassani stated that Bamburi Cement and Hima Cement remained resilient despite the challenging economic conditions witnessed in the various markets and the wider regional economy.
“Despite market challenges, including the absence of sales to Rwanda through Hima, the shelving of major infrastructural projects such as Phase 2B of the Standard Gauge Railway (SGR) project in Kenya, contraction of the Kenyan market and price erosion fueled by aggressive competitive pressure; both Bamburi Cement and Hima Cement grew share while sustaining respective market leadership.”
The Group’s turnover at KShs 36.8 billion was comparable to 2018 performance, an indication of our underlying competitive resilience.
Commenting on the business outlook, the Group Chairman John Simba, noted that Bamburi Cement Group’s outlook for its market in Kenya and Uganda remains cautious in the wake of the Covid-19 pandemic outbreak.
However, the Chairman assured that the Group will continue to execute its Strategy 2022 agenda focusing on our customers to drive topline growth, cost optimization, people, financial strength, and sustainability.
“Over the last two years, the emergence of a strong competitor, National Cement (a member of Devki Group of Companies) has been notable. National Cement has been on an aggressive expansion in the local market with last year’s completion of the acquisition of ARM Cement, the launch of a 1.5Million annual capacity cement plant in Nakuru and additional investment in a second clinker plant in Kajiado with capacity to address the country’s annual clinker imports.
We await to see aggressive efforts by Bamburi to defend its local market share from these major moves by National Cement,” commentary from Genghis Capital Bamburi Cement Ltd FY19 Earnings Note.