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Economy

Cement firms trim output to 4-year low

construction site in Nairobi
Workers at a construction site. FILE PHOTO | NMG 

Shrinking exports market and low domestic consumption have hit the local cement firms, forcing them to cut production to a four-year low.

Cement firms produced 5.37 million tonnes in the 11 months to November, a three percent drop from 5.54 million tonnes for 2018.

The 11-month production has been falling consistently from the 6.16 million tonnes recorded in 2016 as major projects like the standard gauge railway (SGR) and highways neared completion.

“Government spending on infrastructure has gone down and we also witnessed slow-down in the SGR project,” said East African Portland Cement Company (EAPCC) #ticker:PORT acting managing director Stephen Nthei.

“We also export cement to countries that have been hit by political instability like South Sudan and Democratic Republic of Congo. Consumption in such countries went down, so our production has had to come down,” Mr Nthei told Business Daily by phone.

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Cement-makers last year endured hard times due to the depressed demands and cash crunch highlighting a tough period for the sector.

Bamburi Cement issued a profit warning, signalling the lowest earnings to investors in more than 10 years while ARM Cement, the second largest cement company in the country, was acquired by National Cement Company after sinking into administration due to piling debt and losses.

Mr Nthei, however, said the release of funds to counties to fund construction projects and the recent repealing of the interest rate cap will now free up credit and lead to an up-turn in production of cement.

Construction of the 120km Nairobi-Naivasha rail line, one of the biggest drivers of cement consumption, was completed in the first half of 2019 drastically cutting cement consumption.

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