Kenya: Bamburi Cement Posts Drop in Pre-Tax Profit

Nairobi — Bamburi Cement has posted a drop in its pre-tax profit from Sh4.5 billion to Sh3.5 billion in the first-half of this year.

The cement manufacturers said the figure does not factor a one-off receipt of Sh218 million from the insurers in the second-quarter of 2009.

Compared to the same period last year, the group's turnover reduced to Sh13 billion from Sh16 billion, due to slower cement market growth in Kenya and Uganda.

The management said lower prices across all markets were also responsible for the drop.

The company's products, the management added, had an unusually higher market share during the first-half of 2009 due to 'unique' market circumstances in Kenya, which was specific to the year.

Operating profit decreased from Sh4.2 billion to Sh3.3 billion due to lower turnover and increase in power prices, particularly during the first-quarter of the year.

However, the management said this was partly cushioned by the reduction of the fixed operating expenses by 6 per cent, following their cost reduction efforts.

Lower inflation rates in Kenya and Uganda, which were 3.2 per cent and 4.4 per cent respectively and reduction in distribution costs, were also a boost to the company.

During the period, the company said it enhanced its repayment of unsecured US dollar denominated loans from Lafarge by US$ 14 million to mitigate hard currency exposure.

The managing director, Mr Hussein Mansi, said the economy had showed signs of growth and combined with infrastructure expansion and the economic stimulus programme, expected the sector to grow faster in the second-half of the year.

He added that the company will continue shedding off wastage, particularly in the distribution system.

"These efforts will be bolstered by increased capacity when the Kasese plant in Uganda is fully operational in August 2010, and continued reduction of the group's net debt," he said.

He said stronger market growth realised from the mid of the second-quarter in Kenya and higher sales volumes in Uganda, as a result of commissioning of the new cement production line in July, the group is optimistic it will achieve stronger top line growth and results during the second half of the year.