NAIROBI, KENYA, MAR 27— Cement manufacturer-Bamburi Cement has posted a 66.6 per cent drop in net profit for the year ended December 2017, blamed on lower sales in Kenya and flat performance in Uganda.
The Nairobi Securities Exchange listed firm netted $19.5 million (Ksh1.97 billion) last year compared to $58.4 million (Ksh5.89 billion) in 2016, a $38.8 million (Ksh3.92 billion) drop.
The company’s turnover dropped 6.3 per cent to close at $355.8 million (Ksh35.9 billion), down from $379.6 million (Ksh38.3 billion) the previous year.
“The group’s turnover decreased following lower sales in Kenya due to contracted market following prolonged election period, tightening of credit, drought and delayed infrastructure projects,” the firm said in a statement signed by Chairman John Simba and finance director Erick Kironde.
“Uganda sales were broadly flat in both domestic and export markets,” it said.
Operating profit reduced 47.1 per cent to $41.9 million (Ksh4.23 billion) from $79.2 million (Ksh7.99 billion) the previous year “due to lower revenues and higher energy prices.”
“Profit before tax declined as a result of lower operating profit, impact of lower cash deposits at lower interest rates and lower foreign exchange gains in addition to impairment of assets following a review made in the year, totaling Ksh234 million , mainly involving capacity increased feasibility and other projects,” the company noted.
The group said it has taken tax provisions in Uganda over tax assessments that are disputed.
These have affected both operating costs contributing to a reduction in profit before tax and an increase in corporation tax, resulting in an effective tax rate of 52 per cent.
The group is counting on its expansion project in both Kenya and Uganda to increase its output, hoping to translate this to higher revenues.
“The 1.8 million tonnes cement capacity expansion project in both Kenya and Uganda is on course and commissioning of both projects scheduled for the second half of 2018,” Simba said.
He said studies of phase two of the expansion are at an advanced stage, noting that the investment will solidify the group’s long term advantage in the region.
Bamburi is also expecting the market to rebound this year, in line with the projected growth in both domestic and regional markets.
“The group continues to optimise on its administration costs, cost to serve and its innovative product mix. The key focus will be the successful entry of the new capacity offering while benefiting from gains of both new plants,” the firm said in a statement.
It has outlined higher coal and power prices as key risks in 2018, which the group is “putting measures to proactively manage.”
The board has recommended payment of a final dividend of Ksh1.50 per ordinary share, an addition to the interim dividend of Ksh2.5 per share paid out last October.