Profit at Bamburi Cement falls 87 percent to Sh181 million

Bamburi Cement’s net profit for the fiscal year ending December 2022 fell by 86.9 percent to Sh181 million due to lower sales and higher costs.

The Nairobi Securities Exchange-listed company’s net earnings fell from Sh1.38 billion the previous year to Sh38.99 billion as sales fell by 6% to Sh38.99 billion.

Total operating costs fell from Sh39.2 billion to Sh38 billion, nearly matching sales for the quarter.

According to Bamburi, the slowing of economic growth reduced cement sales, while rising inflationary pressures increased power, fuel, transportation, and raw material costs.

“The soaring inflation impacted building materials cost, thereby adversely impacting cement demand. The conflict in Eastern Europe impacted global supply chains, consequently leading to significant increase in sea freight and cost of raw materials,” said the firm.

To put more pressure on net earnings, net finance costs nearly doubled from Sh143 million to Sh224 million.

A reduction of 79% from the Sh3.75 per share or a total payout of Sh1.3 billion in 2021, the board is recommending paying a dividend of Sh0.75 per ordinary share, or Sh272 million.

In accordance with the guidelines set forth by the Capital Markets Authority, Bamburi had issued a profit warning in November to warn investors of a potential profit decline of more than 25%.

The board is hoping for a turnaround in performance this year despite inflation still being above the government’s target range of 2.5 percent and 7.5 percent and supply chains still experiencing disruptions.

“We are cognisant of the current challenging operating environment. However, we remain steadfast in our efforts to drive positive performance in 2023,” said the firm.