advertisement
Companies

Bamburi signals lower earnings with profit warning

A section of Bamburi Cement premises in Mombasa. FILE photo | nmg
A section of Bamburi Cement premises in Mombasa. FILE photo | nmg 

Bamburi Cement #ticker:BAMB has issued a profit warning, preparing investors for its lowest earnings in over 10 years for the financial year ended December 2017.

The cement maker, which also issued a profit warning last year, is set for the second tumultuous year defined by a fall in profits and reduced dividend payout to shareholders when it makes the announcement in the first quarter of 2019.

The board of directors made the announcement Monday morning in a notification to the Capital Markets Authority as is required of all Nairobi Securities Exchange-listed firms whenever they anticipate earnings to dip by at least a quarter.

“The Board of Directors (the “Board”) of the Company wishes to inform the shareholders of the Company and potential investors that, based on the preliminary assessment on the unaudited consolidated management accounts, the 2018 full year earnings of the Group are expected to decrease by more than 25 per cent compared with the year ended 31 December 2017,” the board said.

Difficult conditions

advertisement

In the year ended December 2017, the cement-maker profits tumbled by 67 per cent to Sh1.97 billion. The profit warning therefore means that the firm will post less than Sh1.47 billion in profit.

According to the board, the expected dimmed performance is mainly attributable to difficult market conditions, as well as escalating international energy prices in both Kenya and Uganda. It also cites increased power costs in Kenya and additional provisions, mainly receivables, in Uganda for the fall.

Bamburi’s performance comes at a time other listed cement makers are in deep trouble. Athi River Mining Cement #ticker:ARM was in August placed under administration to shield it from its creditors. It last made a profit in 2014.

On the other hand, state-owned East African Portland Cement #ticker:PORT is cash-strapped and is calling on government to allow it sell part of its land to pay off debts.

Sameer

It joins firms such as Housing Finance #ticker:HFCK and Sameer Africa #ticker:FIRE who issued profit warnings last week, blaming this on a tough operating environment.

Sameer Africa's board has said it expects performance for full year ended December 2018 to dip by at least 25 per cent due to stock-outs that have seen its turnover dip by 31 per cent in nine months.

“The Company experienced severe stock shortages due to production challenges faced by some of its offshore manufacturing partners,” said the firm.

Having cut two consecutive years of loss to post Sh13 million profit last year, the profit warning means the firm will not make more than Sh0.912 million in the year under review.

advertisement