Bamburi Cement Announces Full Year Results for 2014

Bamburi Cement limited announced results for the full year 2014 results with the following highlights:
Group turnover grew by 6.2 percent from KES 33.93bn to KES 36.03bn.The increase was attributable to improved market conditions in Uganda, sales increase in Kenyan markets due to increased government spending in infrastructure projects and increase in inland export markets to Rwanda and Eastern D.R.C.
Gross profits increased by 9.7 percent to KES 9.35bn Bamburi Cement recorded a decline in operating profits, due to higher operating costs driven by higher power prices in Kenya. Additionally, reduction in margins was partly mitigated by cost savings from the petcoke project in Uganda.
Investment income marked a 26.2 percent decline from KES 473.00mn in 2013 to KES 349.00mn in 2014. Finance costs recorded a 37.2 percent decline to KES 76.00mn in 2014. The decrease was attributable to a declining loan burden. Net cash used in financing activities increased by 48.1 percent to KES 6.23bn, while non-current liabilities decreased by 10.2 percent to KES 4.96bn.
Profit before tax grew by 5.2 percent from KES 5.52bn to KES 5.80bn in 2014. Net income increased by 6.3 percent to KES 3.90bn, translating to a 2.6 percent increase in EPS to KES 9.80 in 2014. The company has recommended a final dividend of KES 6.00.
Our view
We expect an increase in cement demand especially from the Kenyan market buoyed by government infrastructure developments such as roads, standard gauge railway ports, power plants and increased construction activities.
We also expect increased cement demand to be driven by improved macro-economic conditions as cement
consumption is highly correlated to economic performance
The company’s focus on regional expansion, production efficiency and clinker production is set to turn Bamburi into profitability in future.
Rapid growth in population and increased urbanisation will increase demand for high rise buildings thus increasing cement consumption.
Competition: This has been a key risk among existing players coupled by intentions of entry by international market players in the industry which might exert pressure on cement prices.
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