ARM uses pricing to secure 16 p.c profit increase

Praadeep Punrana, the managing director of ARM, attributed the firm’s growth to its entry into Kenya’s rural market.

“Our distribution channels to the rural areas and pricing made us gain market share,” said Paunrana in an interview with Business Daily.

Data from the Kenya National Bureau of Statistics indicates a consumption of 1.1 million tonnes of cement in the five months to May this year compared to one million tonnes in the same period last year.

This is a clear indictor that ARM gained over its rivals given its 19 per cent jump in revenues and 20 per cent increase in cement sales.

Bamburi Cement commands a 59 per cent share of the local cement market while EAPCC and ARM control 30 per cent and 11 per cent respectively, according to a 2008 industry report by investment bank African Alliance.

But the new entrants and ARM’s aggressive moves is likely to upset this structure with Bamburi’s position coming under attack.

Increase in consumption

ARM said it was banking on an anticipated increase in consumption in the second half of 2010 buoyed by the recovery of the Kenyan economy to for a better full year performance.

“The company has commissioned the cement expansion plant in Kaloleni and expects to commission Athi River Plant in the fourth quarter of 2010 as scheduled,” said ARM in a statement.

The upgrade in Kaloleni and Athi River will increase its capacity to 750,000 tonnes from 300,000 tonnes as it prepares to grow its share of the Sh28 billion cement market.

Currently, ARM makes cement in Kaloleni, and attempts to utilise its Athi River facility to make cement would give it the cost advantage and the capacity to eat into the market shares of its rivals.