Bamburi posts first-half pretax profit drop

Bamburi Cement posted a 28 per cent drop in first-half pretax profit to KES2.3bn (US$26.2m) from KES3.2bn a year earlier. The Lafarge group company attributed the decline to rising power costs, increased use of imported clinker and the introduction of a mining levy in Kenya.

Operating profit fell 27 per cent to KES2.2bn compared KES3bn in the comparative period of 2013. However, turnover rose 9.5 per cent as a result of higher sales volumes in the first half of the year both to domestic markets and exports to inland Africa markets.

“We are optimistic that the business environment will progressively improve in the second half of the year as the East African regional economies grow briskly while demand for cement and cement related products is expected to rise, ” stated the Group Finance Director Eric Kironde.

“In addition, increased urbanisation plus demand for housing and good commercial properties in the urban centers is expected to continue to drive commercial, private and infrastructural development, thus we expect these segments will continue to increase cement consumption,” said Kironde.

He said the cement manufacturer plans to capitalise on private, commercial and infrastructure projects to ramp up sales and improve industrial productivity to meet customer expectations.
Bamburi’s ongoing cost reduction initiatives, he said, would cushion the company from expected top line pressure and improve operating profit in the long-term.

“The investments made in sourcing alternative sources in energy including the pet coke project in Uganda which was commissioned in January 2014, and ramping up on its alternative fuels substitution rate to higher levels in both Kenya and Uganda, will go a long way in improving efficiency levels thus contributing to its profitability in the remainder of the year,” he stated.