Bamburi Cement – a LafargeHolcim company operating in East Africa – was hit by weak market conditions in 1H18 with earnings down from KES2.7 billion to KES1.2 billion. Earnings were hit by flat turnover, higher power, coal, and raw materials costs, as well as balance sheet write-offs in Uganda.
With earnings down, pre-tax profit fell to KES0.7 billion from KES2.7 billion.
Both of the company’s two operating markets, Kenya and Uganda, posed challenges over the six-month period. Kenya cement market contracts by 8% in a high external cost environment, while the company’s Ugandan operations saw lower sales due to production challenges, competitive pressures on prices, and a slowdown in government expenditure.
More positively, the company reported that expansion projects in both Kenya and Uganda were commissioned on scheduled in 1H18, undergoing acceptance testing at the end of June 2018. Phase 2 of the expansion work continues, aiming to solidify the company’s position as the lowest-cost producer in the region.
Seddiq Hassani, Bamburi’s Managing Director, also noted some cause for optimism over the coming operating periods.
“Despite the Kenyan market contraction in the first half of the year, we anticipate a recovery in the later part of the year and into 2019,” he said. “In Uganda, through the marketing strategies that are being adopted, we expect to further capture the opportunities in the growing Inland Africa and captilise and grow our market share despite of the current oversupply situation markets.”
Read the article online at: https://www.worldcement.com/africa-middle-east/03092018/bamburi-cement-reports-challenging-1h18-results/