NAIROBI, Kenya, Aug 31 – Leading cement producer Bamburi Cement Group on Monday announced a 49 percent increase in operating profit for the period ended June 30, 2009 from Sh4.3 billion compared to Sh2.9 billion for the corresponding period of 2008.
The group’s turnover climbed by 41.5 percent to Sh16.2 billion, up from Sh11.5 billion, driven by a strong resurgence of the domestic market despite the challenges faced during the same period last year, as well as improved export sales to inland Africa markets.
Making the announcement after a Board of Directors meeting on Monday, Bamburi Cement Group Chairman, Richard Kemoli said: “The strong results over six months to June 30 demonstrates the group’s resilience particularly in the difficult economic conditions spurred by global economic downturn, increased competition and the negative impact of the fluctuating rate of local currencies against major hard currencies.”
During the period under review, production costs increased by 52.2 percent primarily as a result of the surging cost of fuel-oil, power and coal, the inflationary trends due to the depreciation of the local currencies and the poor and erratic power quality and supply in Uganda.
Mr Kemoli said: “However, these trends were partly mitigated by a 22.9 percent decline in distribution costs arising from significant improvements in efficiencies in the distribution system and also lower use of purchased clinker in Uganda due to increased productivity.”
Earnings per share went up by 55.1 percent to Sh8.19. The group’s tax charges payable to both the Kenya and Uganda governments increased by 52.6 percent to Sh1.34 billion. The Board proposed an interim dividend of Sh1.50 per ordinary share totalling Sh545 million, which is payable on or about October 23.
The construction of Sh7 billion new clinker and cement plant in Uganda is progressing well and is expected to be commissioned by mid 2010. The company will use more of its internally generated cash to finance the remainder of the project.
Commenting on the results, the Group Managing Director, Hussein Mansi: “Although we have been operating in an environment that has presented considerable challenges both to our business and the industry in general, Bamburi Group has continued to realise positive results due to the business model that we will continue to follow both in good times and in difficult conditions.’’
Mr Mansi reiterated the group’s commitment to upholding good safety standards and practices for staff and contractors alike as a route to achieving the group’s vision 2010. “We recognise that improving safety and health of our staff and contractors has a positive impact on their working conditions and safety practices have a direct bearing on business performance. The group invested about Sh65 million (which represents two percent of profits after tax) to drive its safety agenda in the region,” said Mr Mansi.
During the six months under review, Bamburi continued to invest significantly towards various environmental, educational and community initiatives. The group disbursed about Sh75 million towards these initiatives, which is part of the Sh200 million corporate social responsibility commitment for the 2009 financial year.
At the start of the year, the group responded to an appeal by the government of Kenya to support national famine relief effort with a donation of Sh5 million. The group committed a further Sh14 million worth of cement to support the Ministry of Education in the rehabilitation of schools that were affected by the Post Election Violence. In Uganda, the group has committed Sh20 Million to support the Hima Community Malaria Control Program, which targets about 28,000 residents on Hima.
To date, through its schools tree planting programs and bio fuel project; the group since 2006 has planted more than a million trees across the country and has remained a strong contributor to the National Billion Tree Campaign.
On the group’s outlook for the second half of 2009, Group Finance Director, Joshua Oigara said that although positive results have been achieved more stringent cost optimisation initiatives will be necessary during the second half as the impact of the prolonged drought and the influx of cheaper cement imports begins to take effect.
“We look to the remainder of 2009 with cautious optimism due to projected slowdown in regional economies’ expansion on account of global economic downturn,” said Mr Oigara “The prolonged drought in Kenya is expected to impact cement consumption and will adversely affect the cost of power due to expected increase in use of thermal power.”