High power costs squeeze Bamburi half year profit to Sh18.7Billion

By Steve Umidha

Bamburi cement Friday announced a net profit of Sh18.7billion for half year period compared to Sh18.6bilion it registered in the corresponding period last year, a flat rate growth for the cement maker.

The firm registered a decline in its operating profit from Sh1.2bn in 2018 to Sh0.3bn in this period, with the dropped being blamed on higher energy and logistics costs fueled by higher than prior year power tariffs and increase in fuel prices over the same period last year.

The firm also attributed the flat rate growth to lower profit margins on account of loss of sales in Rwanda following the closure of the Uganda/Rwanda border as well as higher depreciation charge following the commissioning of capacity expansion projects in both Kenya and Uganda effective mid last year.

“Despite significant headwinds as a result of contracted cement market in Kenya and the inaccessibility of the Rwanda market, we have managed to hold the topline from declining, thanks to the benefits accruing from progressive successful implementation of our “Building for Growth” strategy,” said the firm’s Chief executive Seddiq Hassani.

Kenya and Uganda recorded mixed performance over the period. In Kenya, cement sales have been impacted by the contracting cement market and a significant drop in cement uptake by the SGR project compared to same time last year when Phase 2A was still underway.

In Uganda, the closure of Rwanda border since early this year, rendered inaccessible the Rwanda market which contributes about 20% of Uganda revenues.

In the second half of 2019, the group profitability is expected to progressively recover on account of a positive market outlook coupled by stringent cost containment initiatives.”

However, the impact of the closure of the Uganda border with Rwanda is a downside risk and the Group hopes this matter will be resolved swiftly.

The Group will continue to execute its Strategy 2022 – “Building for Growth”, while maintaining focus on cost optimization in order to grow profitably and competitively. The Group remains focused on execution of its strategy around route to market, logistics mastery initiatives, industrial excellence, cost discipline, enhanced customer experience and creating value to all its stakeholders in the medium to long term.