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News from East Africa

World Cement,

Profits and losses reported in Kenya

An emailed statement sent through the Nairobi Stock Exchange from the East African Portland Cement Co. in Kenya shows a 26% profit increase during the first half of the year -great news for stock owners who saw the shares rise from 7 shillings each last year, to the current figure of 8.81 shillings.
East African Portland Cement Co. credit’s its success to the “strong cement demand in the local market,” and although it reports a marginal decline in the export sales, a net income of 792.8 billion shillings underlines its stronghold in the cement industry.

In contrast, Lafarge SA’s Kenyan division, Bamburi Cement Co. reported a 24% decrease in profit. The company’s emailed statement revealed a net income for the year through December to be 5.3 billion shillings, considerable lower than last year’s 7 billion shillings.  Bamburi Cement Co. attaches blame for its loss to rising competition and electricity costs.

The cost of electricity

Bamburi Cement Co. in Kenya is not the only one voicing concerns about electricity. In neighbouring Tanzania, a power crisis has deeply affected the country as a whole during the past couple of months, and in particular Tanzania Portland Cement is expressing a fear that sales targets may not be met this year as a result of this.

The managing director of Tanzania Portland Cement Co., Lesoinne Pascal criticised the country’s government for not taking “immediate measures” to address the power crisis currently affecting industry. Pascal addressed the company’s distributors earlier this week at an event to celebrate meeting last year’s sales targets – Tanzania Portland Cement Co. increased its production capacity to 1.4 million tpa in 2009 securing a 40 – 50% product market share resulting in a strong 2010. Pascal then commented on the current situation where he stated, “the development of this country will be hindered, since we will not be able to produce cement according to our plans.”

Cement industry predicts growth in the upcoming year

Despite a few losses, and vocal concerns regarding the rising costs of energy, the cement industry in East Africa remains optimistic about future growth. The East African Portland Cement Co. released a statement promising sales remaining on a “growth path” in the future. In addition to this, the start of operations of a coal-fired plant in December should help reduce the cost of energy in the second half of the financial year.

Bamburi Cement Co. is also optimistic about the future and the company’s board has recently stated that they are reacting to the “increased competitive environment and [will] continue to implement appropriate strategies to enhance the group’s growth and profitability.” The company’s profits are likely to increase with the help of expansion in the form of a US$120 million cement plant in Uganda from October, which will increase its output of building material by 500 000 tpa.

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