Bamburi Cement has raised its dividend payout to shareholders 7.3 times to Sh1.99 billion, in the financial year ended December 2023, on increased cash position and expects to follow up in the coming months with another payout from the proceeds of divesting from the subsidiary it had in Uganda.
The Nairobi Securities Exchange (NSE)-listed lender on Wednesday proposed the payout, which will be a growth from Sh0.75 per share totalling Sh272 million that had been paid previously. The latest dividend will be paid on or about July 25 to shareholders on the register at the end of May 24.
Bamburi CEO Mohit Kapoor said the increased dividend was a result of cash generated from operations improving to Sh2.89 billion from a negative cash position of Sh340 million. The higher dividend was despite the firm posting a Sh399 million net loss from Sh181 million net profit in the previous year.
“This is the highest dividend shareholders will be getting and it is thanks to improved cash position,” said Mr Kapoor, adding that the distribution is a normal dividend and a special one from the proceeds of the sale of business in Uganda is still lined up.
He said the board would soon be deciding on how much of the proceeds from the sale of its entire 70 percent stake in its Ugandan subsidiary, estimated at $84 million (Sh10.9 billion), would be paid to shareholders as a special dividend.
“This distribution has no relationship with the Hima deal. This is purely based on a fantastic performance on cash from operations in Kenya. We have enough money for our working capital and capital expenditure requirement for this year and we are also expecting to generate more.”
“As to whether we will pay a special dividend 100 percent [of Hima deal proceeds] or part of it, that is a separate discussion we will have in the subsequent meeting with the board.”
The cement maker’s net profit from continuing operations more than doubled to Sh670 million from Sh258 million but a Sh1.07 billion loss from discontinued operations—the offloaded Ugandan subsidiary— resulted in the overall Sh399 million overall loss.
Bamburi’s share price on NSE has this year alone rallied by 30 percent and opened Wednesday trading at Sh46.60. Wesley Manambo, a senior associate for research at Standard Investment Bank, said investors have been pricing in the expected special dividend.
Mr Manambo expects the price to remain high given that Bamburi has declared a higher normal dividend and the board expects to pay a special dividend from the Hima deal cash flow.
“The market will likely adjust the timing for the special dividend because it initially priced it for 2023 but this is now likely to be booked in the 2024 financial year. What this means is the share price will likely remain elevated but a near-term rally might smoothen out,” said Mr Manambo.
“Booking in special dividends, coupled with a strong performance in Kenya, will see the market favourably price Bamburi in the near term. This will keep the price elevated until the book closure of the anticipated special dividend within 2024. After that, the long-term share performance will be based on fair value estimates and overall strategy.”
