Bamburi Cement has announced that it has shelved plans to sell its Mombasa-based precast products plant after a bid to offload it last year, fell through.
Bamburi Cement Chief Executive Seddiq Hassani made the announcement and said that Bamburi had decided to sell the plant partly due to logistical challenges that came with overseeing operations in Mombasa while the company’s main office is in Nairobi.
The plant is housed by the cement maker’s subsidiary, Bamburi Special Products, which has another factory in Athi River that produces both ready-mix concrete and precast concrete blocks. He noted that the Athi River plant is capable of servicing its clientele for precast products, many of them located in Nairobi and its environs.
“We wanted to sell the precast operation in Mombasa so that we can focus on our Nairobi operation. The Mombasa operation is small and difficult to operate from Nairobi and the market is mainly around Nairobi,” said the CEO.
Declined revenues
In the six months to June 2020, Bamburi’s revenues declined 13% to Sh 16.2 billion from Sh 18.7billion over a similar period in 2019. It attributed the decline to Covid-19 restrictions put in place in March to contain the spread of the disease.
This resulted in a drop in activities across different economic sectors, including building and construction. The company had signed an agreement with Yellow House Ltd, but the buyer failed to meet the agreed conditions. The Competition Authority of Kenya approved the deal in March last year. However the pubic was notified that transaction was not completed due to the termination of the agreement by parties.
“We had decided to sell it to Yellow House but, unfortunately, the company did not meet the conditions precedent to the agreement and the takeover was cancelled. We do not know the factors that led to their failure to meet the conditions and whether it is related to Covid-19. We have kept the operation in Mombasa and continue to operate it within our Bamburi Special Products operations,” said Mr Hassani.
Mr. Hassani noted that the Bamburi Cement would continue operating the plant with no immediate plans to dispose. He pointed out that the industry had started to recover in the second half of 2020 following the easing of the restrictions. He expects the recovery to continue this year, banking on individual home owners as well as big ticket infrastructure projects.
“The cement and construction sectors are mainly driven by individuals building homes, which is about 70% of the market, with the balance mainly driven by the big projects. There is a positive trend among individuals building homes or undertaking such projects over the second half of 2020,” said the CEO.
