A resilient Bamburi Cement Group defies Covid-19 in 2020 to post a 144% increase in pre-tax profits while registering an impressive turnaround in Cashflow
By Douglas Muriithi
“The Group’s results for the year 2020 demonstrates the great
resilience of our business. We are proud of our team’s agility to
weather the storm, effectively driving cost savings ahead of
revenue decline, improving net working capital and delivering
a record high Cashflow,” Dr John Simba – Chairman, Bamburi
Cement Group
Despite a topline decline of 5%, the cement producing company
with operations in both Kenya and Uganda, and which is listed in
the Nairobi Securities Exchange, posted a Pre Tax profit of Kes 1,776
million in the financial year ending 31 December 2020. This is a
144% increase over the Kes 728 million realised in 2019. The Group
attributed the decline in topline to adverse impact of stringent
Covid-19 containment measures announced by the Kenya and
Uganda governments at the onset of the pandemic in March 2020.
According to the company, the containment measures involving
curfews, lockdowns and restriction of movement for goods and
people across borders in the first half of 2020 caused the Group
topline to decline by 13%. However, the company registered a
recovery in the second half of 2020, thanks to the easing off of the
containment measures.
The growth in the Group’s Pre Tax profit was driven by a significant
77.5% growth in operating profit in 2020 to Kes 1,983 million (2019:
Kes 1,117 million). Additionally, a 47% reduction in net finance costs
to Kes 207 million from Kes 369 million in 2019, further contributed
to the growth in Pre Tax profit. The Group attributes the good
performance to the launch and implementation of the “Health, Cost
and Cash” (HCC) agenda adopted at the onset of the Covid-19
pandemic to build resilience in, and crisis-proof the business. In the
execution of the HCC agenda, the three pillars of Health
preservation, Cost Optimisation and Cash protection were
prioritized as key business deliverables during the pandemic crisis.
Cost optimization throughout the company, coupled with significant
turnaround of the Uganda subsidiary after a depressed 2019
performance attributed to the closure of the Uganda-Rwanda
border, cushioned the Group’s bottomline from impact of the
topline decline to Kes 34,884 million in 2020 (2019: Kes 36,796
million).
Thanks to the “Cash” pillar of the HCC agenda, the Group generated
record Cashflow of Kes 4,856 million (2019: Kes 359 million).
Commenting on the 2020 results, Mr Seddiq Hassani, Bamburi
Cement Group Managing Director stated that “Our profitability
despite the adverse economic impact of Covid-19 pandemic, goes a
long way to show the resilience of our employees, great teamwork,
and the strong foundation set by our company culture and long-term
business strategy. I take extreme pride in sharing these results with
all our employees who delivered them.”
According to the Group Chairman, Dr John Simba, “The Group’s
results for the year 2020 demonstrates the great resilience of our
business. We are proud of our team’s agility to weather the storm,
effectively driving cost savings ahead of revenue decline, improving
net working capital and delivering a record high Cashflow.”
Through the Health pillar of HCC, the Group implemented a variety
of measures to protect the health of its employees and partners,
including strict protocols across all its operating sites, having non-
operational staff work from home, and providing staff with Covid-
19 care packs. The Group was also visibly involved in the collective
drive to help alleviate the impact of the Covid-19 pandemic,
committing Kes 15.6 million and UGX 456.5 million to support the
fight against the spread of the virus in both Kenya and Uganda
respectively.
In Kenya, the Kes 15.6m includes Kes 5 million which was donated
directly to the Government sponsored Covid-19 Emergency Fund
kitty, with the balance going towards donation of Personal
Protective Equipment (PPE) to healthcare workers in various
County hospitals, supporting communities in Machakos, Kajiado,
Mombasa, Kilifi and Kwale counties with water tanks, face masks,
sanitizers and other Covid 19 defensive initiatives. In Uganda,
through Bamburi’s subsidiary Hima Cement Limited, donations of
sanitisers, soap and PPEs were made to communities in Kasese,
Kapchorwa and Tororo. In addition, Hima Cement also donated
mattresses for a Covid-19 ward in Tororo Hospital in Eastern
Uganda, cement towards the construction of driver shelters at
border crossing points; and availed its ambulance to the Covid-19
District Task Force at Kasese to serve Covid-19 emergency needs.
In celebrating the strong performance of the company, the
shareholders will not be left out. The Board of Bamburi Cement
Limited has recommended the payment of a dividend of Kes 1,089
million, a contrast to year 2019 when no dividend was declared.
In assuring the shareholders of the company, Dr John Simba said
that “In consideration of the strong performance delivered and in
recognition that year 2020 was a difficult one financially for many,
our esteemed shareholders included, the Board of Bamburi Cement
Limited, recommends the payment of a final dividend of Kes 3.00 per
share.”
On the 2021 Outlook, Mr Hassani expressed optimism, noting
that “The strategic priorities for the business and its partners are
clearly defined and their successful execution will prove critical
against the current operating background especially with the
emergence of a new Covid-19 wave that has necessitated partial re-
introduction of containment measures. I am optimistic that we have
established a solid foundation from which we will continue to execute
our strategic priorities in 2021. I have confidence in the ability of the
two governments of Kenya and Uganda to help contain the pandemic
and promote a positive economic environment supportive of business
growth.”
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