This archive report was first published on 8 May 2020.
Kenyan cement manufacturer Bamburi Cement has reported a significant decline in profits for the year ended December 2019, with the company's profit after tax dropping by 37% to Sh359 million.
The decline in profits comes despite a slight increase in turnover, which stood at Sh36.7 billion compared to Sh37.2 billion in the previous year. The company attributes the decline in turnover to its inability to access the Rwandan market through its Ugandan subsidiary Hima Cement and the shelving of the construction of Phase 2B of the Standard Gauge Railway (SGR).
Group Managing Director Seddiq Hassani also pointed to a decrease in selling prices as a contributing factor to the decline in profits, citing the existence of 'too many players' in the East African market.
Notably, the company's taxation costs increased significantly from Sh48 million in 2018 to Sh369 million in 2019, with Hassani attributing this increase to the absence of investment deduction allowances for Hima Cement in 2019, as well as the suspension of Rwanda operations.
As a result of the decline in profits, Bamburi Cement has joined a list of companies that have withheld dividend payments in order to conserve capital due to the uncertainty caused by the COVID-19 pandemic.
"The outbreak, which has caused a slowdown in business operations across Uganda and Kenya, and a complete lockdown in other parts of the world, may have implications on operating results," Hassani said.
Highlights of the company's financial results include a total operating cost of Sh35.6 billion, an increase in operating profit to Sh1.1 billion, and a profit before tax of Sh728 million.
