Bamburi links drop in profit to market wars

The country’s reliance on thermal power was higher in the first half of 2010 compared to the same period last year as poor weather affected the contribution of cheaper hydro power to the national grid.

The board proposed an interim dividend of Sh1.50 per share as its share price stood at Sh205 at the close of trading on Thursday, compared to Sh203 on Wednesday.

The company said it was banking on an anticipated increase in consumption in the second half of 2010 to bounce back to higher profitability.

“With stronger market growth realised from the mid of the second quarter in Kenya and higher sales volumes in Uganda, as a result of commissioning of the new cement production line in July, the group is optimistic of achieving stronger top line growth and results during the second half of the year compared to the previous year and the first half of this year,” said Mr Mansi.

Betting on the recovery

Bamburi is betting on the recovery of the Kenyan economy, increased infrastructure spend by the government, and increased home lending by banks to feed demand for cement and grow its revenues.

The economy grew by 4.4 per cent in the first quarter of the year compared to 5.6 per cent in the same period a year earlier.

The Central Bank of Kenya says performance in agriculture, the financial sector, and the commodities export market point to faster recovery in the second half.

But Bamburi says end year profits are set to be lower than last year’s when the Sh1.4 billion gain from sale of a 10 per cent stake in ARM is factored in.

Bamburi reduced its holding in ARM from 14.1 per cent to four per cent last October.