BAMBURI CEMENT PROFIT INCREASES

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.”