Bamburi Cement Group recorded a 32.7 per cent drop in net profit due to decline in the Kenya cement market, lower selling prices and the impairment of Rwanda assets.
The Group turnover also dropped by 1.1 per cent to Sh36.8 billion compared to Sh 37.2 billion in 2018.
“The slightly lower Turnover is attributed to a comparatively adverse market situation in 2019 compared to 2018,” read the firm’s financial statement.
In 2019 the firm was unable to access the Rwanda market through it’s Uganda based subsidiary Hima Cement Limited , leading to loss of volumes previously sold in Rwanda.
The absence of the investment deduction allowance benefit for Hima in 2019, plus the suspension of Rwanda operations led to high tax charges thus dropping the firm’s comprehensive income by 74 per cent to Sh 350 million from Sh1348 million in 2018.
In Kenya, overall sales were also impacted by the shift of volumes previously exported to Uganda from Bamburi Cement, following the commissioning of Hima Cement capacity expansion project in 2018, further shaving off volumes out of Bamburi Cement.
“Bamburi Cement and Hima Cement have remained resilient despite the challenging economic conditions witnessed in the various markets and the wider regional economy,” said Group Managing Director Seddiq Hassani.
In Uganda, although overall sales were negatively impacted by the inability to access the Rwanda market, Hima Cement domestic volumes grew.
“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 and price erosion fueled by aggressive competitive pressure; both Bamburi Cement and Hima Cement grew share while sustaining respective market leadership,” Hassani said.
The closure of the border between Uganda and Rwanda in February 2019 negatively impacted further growth.
“The Group’s outlook for the Kenyan and Ugandan market remains cautious in the wake of the Covid-19 pandemic outbreak,” said the Group Chairman John Simba.
He added that the group will continue to execute it's Strategy 2022 agenda focusing on customers to drive topline growth,cost optimization, people, financial strength and sustainability.