East African producers report mixed results


Updated Wed, 02 Apr 2014 09:42:15 GMT

ARM Cement Ltd (formerly Athi River Mining Cement Ltd) has reported a 12% increase in full year pre-tax profit. The Kenyan company benefited from a residential construction boom in a thriving economy as the country caters to a growing middle class.

ARM Cement Ltd is the second largest cement producer in Kenya, with 1 million tpa capacity. In addition, the company has a new 750 000 tpa cement plant in Tanzania and is expanding its presence in Rwanda.

Kenya’s leading cement company, Bamburi Cement Ltd, reported a decrease in turnover in 2013 due to lower revenues in Uganda. The company reported that better results are expected in 2014 as increased infrastructure development boosts demand in Kenya and energy tariffs ease.

Nearby in Tanzania, Tanga Cement Company Limited has reported a decline in net profit, which fell to TSh.32.45 billion from TSh.34.49 billion in 2012. Revenues also fell, though the company managed to curtail the cost of sales at TSh.120 billion down from TSh.129.8 billion the previous year. Tanga Cement has been competing with low-priced imports, putting pressure on sales volumes and prices. The company is focused on increasing its competitive position through capacity expansion and cost efficiency programmes.

Low cost imports have long been a problem for the East African region. Imported cement does not face the same cost and energy pressures that challenge local producers. However, continued investment in the domestic cement industry may see that situation change in the future. For example, one of the ways in which Tanga Cement reduced costs last year was to secure a local coal supply, while Bamburi Cement is in the process of commissioning a new petcoke mill in Uganda, which will reduce energy costs.