NAIROBI, KENYA, DECEMBER 4 — Bamburi Cement has warned that 2018 full year earnings of the Group are expected to decrease by more than 25 per cent compared with the year ended December 31, 2017.
This is on the back of a tough operating environment and escalating international energy prices in both Kenya and Uganda, the company notice to the Capital Markets Authority (CMA), through the Nairobi Securities Exchange (NSE).
This announcement is made by Bamburi Cement Limited (the “Company”, together with its subsidiaries, the “Group”) pursuant to Regulation G.05 (1)(f) and (2) of the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002.
“While the final 2018 financial results will be announced in the first quarter of 2019, the board of directors wishes to inform the shareholders of the company and potential investors that, based on the preliminary assessment on the unaudited consolidated management accounts, the 2018 full year earnings of the group are expected to decrease by more than 25 per cent compared with the year ended December 31, 2017,” the firm reported.
The company has issued a similar warning last year, when its profit before tax declined to Ksh 4.1 billion from the prior year of Ksh 8.3 billion.
During the year, Group cash position reflected a decrease to Ksh2 billion from the prior year of Ksh 6.9 billion, primarily due to dividend payments and the capacity expansions in both Kenya and Uganda.
The 2017 drop in earnings was blamed on among others; drought and the prolonged election period which led to lower construction activity especially in the individual home builder segment.
In contrast, Uganda had a broadly flat market in both the domestic and exports markets in 2017.
The 2018 decrease is mainly attributable to difficult market conditions, escalating international energy prices in both Kenya and Uganda, increasing power costs in Kenya and additional provisions, mainly receivables in Uganda.
“This announcement is based solely on the Company’s preliminary assessment of the Group’s expected financial results for the year 2018,” the Group said in the notice.
Last year, the Group’s turnover decreased by Ksh 2 billion to Ksh36 billion with operating profit declining to Ksh4.8 billion from Ksh8.0 billion in 2016, primarily driven by the overall decline in top-line revenues and higher energy costs.
Earlier this year,Bamburi’s parent company-LafargeHolcim embarked on a market capture strategy which involves specialized one-stop building material stores in Kenya.
The firm opened four outlets in Nairobi, Machakos and Kiambu Counties.