Reduced cement consumption amid high operating costs is likely to impact Bamburi Cement’s earnings this year, management has warned.
The Nairobi Securities Exchange (NSE) listed cement maker has projected net earnings for the financial year 2022 will be lower than that reported in the financial year 2021, by at least 25 per cent.
It’s net profit was Sh1.4 billion in 2021, which was an increase from Sh 1.1 billion in 2020.
“The expected decline in earnings is largely attributable to a slowdown in market demand for cement, high energy cost coupled with increased raw material costs due to global disruption of supply chain,” chairman John Simba said.
He however said the board is confident that the company will register improved performance and profitability in the future, driven by
the expected recovery of the economy and an improvement in input costs.
There has been a drop in cement demand in the second half of the year, Central Bank of Kenya data shows, as activities in the construction sector drop.
The sector’s growth was at 6.4 per cent in the first quarter of the year before dropping to 5.8 per cent in quarter two and 4.5 per cent in t6he third quarter.
This year, overall growth in the construction sector is projected at 5.6 per cent compared to 6.6 per cent last year.
Monthly cement sales turnover was recorded at about Sh7 billion in August having dropped from Sh7.9 billion in June.
Completion of the construction of the Nairobi Express Way is among the reasons for the drop in demand for cement in the market, albeit the construction sector remains among key drivers of the economy this year.
The November 2022 CEOs Survey revealed sustained optimism largely due to pick up in activity with end of election drag and settling in of new government.
Apart from building and construction, other sectors driving growth are ICT, real sector, manufacturing (especially renewable energy), hospitality, healthcare and pharmaceuticals.
Nevertheless, firms raised some concerns over high inflation; stronger US dollar, possible global recession, drought conditions in some parts of the country, decline in consumer demand and the war in Ukraine.
