Bamburi Cement has secured lucrative government contracts for the supply of cement for key infrastructure projects in the region as part of efforts to staying afloat in a competitive cement market that has seen its net profit drop by 80% in five years, with shareholders losing over Sh3 billion in dividends during the same period.
The subsidiary of LafargeHolcim, has won tenders to supply cement key government infrastructure projects in Kenya including Thwake dam, Nairobi Expressway, Dongu Kundu bypass, Lamu port, Lamu Port-South Sudan-Ethiopia-Transport Corridor and the Sh160 billion Nairobi-Mau Summit Highway.
In Uganda, the firm through its subsidiary Hima Cement Ltd supplies cement to the oil and gas projects in Albertine region and gold mines in the Democratic Republic of Congo (DRC).
“All these have contributed to improving our topline,” said Group Managing Director Seddiq Hassani.
Cost-cutting measures
The regional cement maker which is listed on the Nairobi Securities Exchange is fending off competition through cost-cutting measures, introduction of low cost construction materials and bidding for mega government cement supply contracts to shore up its thinning revenues that have seen shareholders’ dividends per share drop to as low as Sh3 last year from a Sh12 in 2016.
Group net profit declined to Sh 1.05 billion last year from Sh 5.24 billion in 2016 while total sales fell eight percent to Sh 34.88 billion from Sh 38.03 billion during the same period. Sales in Kenya declined to Sh 20.67 billion from Sh 21.26 billion while that in Uganda fell to Sh 14.21 billion in 2020 from Sh 16.77 billion in 2016 during the five-year period. Cost-cutting measures, which included letting go of 29 employees in its Kenyan operations resulted in reduced operating costs by Sh 2.49 billion in 2020.
“Commitments of the governments of Kenya and Uganda towards delivery of the ‘Big 4’ agenda and key infrastructure projects like oil and gas respectively continue to generate positive prospects for economic recovery in the second half of 2021,” said John Simba, the chairman in the 2020 annual report.
