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Bamburi blames profit drop on Uganda expansion

NAIROBI, Kenya, Aug 3 – Lafarge Bamburi Group has posted a 13 percent drop in pre-tax profit to stand at Sh3.7 billion for the six months ended 30 June 2012.

The cement firm said the decline was due to loan financing costs in Uganda and losses on exchange, despite growth in investment income on deposits.

The Group’s operating profit reduced by nine percent to Sh3.6 billion that was negatively impacted by continued volatility of global fuel prices, resulting in higher raw material, transport and power costs.

This was further aggravated by the removal of a Government power subsidy in Uganda, consequently leading to an increase in power prices by 70 percent.

Turnover rose by 17 percent to Sh19.2 billion, while cash generated from operations during the period under review amounted to Sh5.1 billion, 33 percent higher than what was generated last year.

The Directors recommend the payment of an interim dividend of two shillings per ordinary share, bringing the interim dividends for the year to Sh726 Million.

In addition to the new cement capacity at its Uganda subsidiary, Hima Cement, the Group that is seeking to solidify its position as the regional leader has over the last two years invested close to Sh450 million in additional capacity in Ready Mix and pre-cast operations in Kenya.

The company is in the process of completing the installation of an Electrostatic Precipitator (filtration system) this month, which it hopes will improve clinker production at its Mombasa Plant.

Standard Investment Bank (SIB) said that over the last five years cement industry players have invested over Sh42 billion in capacity expansion.

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This investment has seen the cement grinding capacity in the region increase by 65.8 percent over the same period to 10.4 Million Tonnes Per Annum (mtpa) in 2011; a figure SIB expects to further increase by 41.8 percent to 14.76 mtpa by 2015.

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Between 2001 and 2010 total cement traded across the East African Community jumped from 0.447 mtpa to 2.182 mtpa.

Kenya remains the region’s largest net exporter with 0.61 mtpa in 2010, up from 0.23mtpa in 2002, while Rwanda is the largest net importer with 0.21mtpa in 2010.

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