Bamburi Cement Group posts 144% increase in pre-tax profits
Bamburi Cement Group has posted a 144% increase in pre-tax profits over the Ksh. 728 million realised in 2019.
In a statement to newsrooms on Wednesday, the company said the results defied a topline decline of 5% and the effects of the COVID-19 pandemic.
““The Group’s results for the year 2020 demonstrates the great resilience of our business. We are proud of our team’s agility to weather the storm, effectively driving cost savings ahead of revenue decline, improving net working capital and delivering a record high Cashflow,” said Dr John Simba, Chairman, Bamburi Cement Group
The cement producing company — with operations in both Kenya and Uganda — attributed the decline in topline to adverse impact of stringent Covid-19 containment measures announced by both governments at the onset of the pandemic in March 2020.
According to the company, the containment measures involving curfews, lockdowns and restriction of movement for goods and people across borders in the first half of 2020 caused the Group topline to decline by 13%.
However, the company said it registered a recovery in the second half of 2020, thanks to the easing off of the containment measures.
Mr Seddiq Hassani, Bamburi Cement Group MD said: “Our profitability despite the adverse economic impact of Covid-19 pandemic, goes a long way to show the resilience of our employees, great teamwork, and the strong foundation set by our company culture and long-term business strategy. I take extreme pride in sharing these results with all our employees who delivered them.”
And according to the Group Chairman, Dr John Simba: “The Group’s results for the year 2020 demonstrates the great resilience of our business. We are proud of our team’s agility to weather the storm, effectively driving cost savings ahead of revenue decline, improving net working capital and delivering a record high Cashflow.”
The growth in the pre-tax profit is said to have been driven by a significant 77.5% growth in operating profit in 2020 to Ksh. 1,983 million (2019: Ksh. 1,117 million).
Additionally, a 47% reduction in net finance costs to Ksh. 207 million from Ksh. 369 million in 2019, is said to have further contributed to the growth in pre-tax profit.
The Group attributed its performance to the launch and implementation of the Health, Cost and Cash (HCC) agenda adopted at the onset of the Covid-19 pandemic to build resilience in, and crisis-proof the business.
In the execution of the HCC agenda, the company said the three pillars — Health preservation, Cost Optimisation and Cash protection — were prioritized as key business deliverables during the pandemic crisis.
Cost optimization throughout the company, coupled with significant turnaround of the Uganda subsidiary after a depressed 2019 performance — attributed to the closure of the Uganda-Rwanda border — are said to have cushioned the Group’s bottomline from impact of the topline decline to Ksh. 34,884 million in 2020 (2019: Ksh. 36,796 million).
“Thanks to the ‘Cash’ pillar of the HCC agenda, the Group generated record Cashflow of Ksh. 4,856 million (2019: Ksh. 359 million),” the statement reads.
Through the Health pillar of HCC, the Group is reported to have implemented a variety of measures to protect the health of its employees and partners, including strict protocols across all its operating sites, having non-operational staff work from home, and providing staff with Covid-19 care packs.
The Group said it was also visibly involved in the collective drive to help alleviate the impact of the Covid-19 pandemic, committing Ksh. 15.6 million and UGX 456.5 million to support the fight against the spread of the virus in both Kenya and Uganda respectively.
In Kenya, the Ksh. 15.6m includes Ksh. 5 million which was donated directly to the government-sponsored Covid-19 Emergency Fund kitty.
The balance is reported to have gone towards donation of Personal Protective Equipment (PPE) to healthcare workers in various county hospitals; supporting communities in Machakos, Kajiado, Mombasa, Kilifi and Kwale counties with water tanks, face masks, sanitizers and other Covid-19 defensive initiatives.
In Uganda, through Bamburi’s subsidiary Hima Cement Limited, the company said donations of sanitisers, soap and PPEs were made to communities in Kasese, Kapchorwa and Tororo.
In addition, Hima Cement is reported to have donated mattresses for a Covid-19 ward in Tororo Hospital in Eastern Uganda; cement towards the construction of driver shelters at border crossing points and availed its ambulance to the Covid-19 District Task Force at Kasese to serve Covid-19 emergency needs.
The statement said the Board of Bamburi Cement Limited has recommended the payment of a dividend of Ksh. 1,089million, a contrast to year 2019 when no dividend was declared.
“In consideration of the strong performance delivered and in recognition that year 2020 was a difficult one financially for many, our esteemed shareholders included, the Board of Bamburi Cement Limited, recommends the payment of a final dividend of Ksh. 3.00 per share,” Dr John Simba said.
On the 2021 Outlook, Mr Hassani expressed optimism: “The strategic priorities for the business and its partners are clearly defined and their successful execution will prove critical against the current operating background especially with the emergence of a new Covid-19 wave that has necessitated partial re-introduction of containment measures. I am optimistic that we have established a solid foundation from which we will continue to execute our strategic priorities in 2021. I have confidence in the ability of the two governments of Kenya and Uganda to help contain the pandemic and promote a positive economic environment supportive of business growth.”