Bamburi Cement Ltd posted a 72.8% decline in half year profit before tax to settle at Ksh722 million as against the Ksh2.6 billion it had recorded last year.
After tax, the profit further declines to Ksh399 million, a 78% year on year slump. The dip is mainly due to a disputed 45% tax imposed in Uganda. According to the Bamburi Cement’s half year financial results released on August 30, the cement manufacturer had made Ksh1.8 billion profit in the first six months of 2017.
The company said market conditions in Kenya and Uganda were responsible for the weighed down performance. “The first half of the year was challenging as the market in Kenya continued to contract closing 8% behind prior year in a high external cost environment,” the Bamburi Cement Board said.
In Uganda, a combination of lower sales due to production challenges, competitive pressure on prices and a slowdown in government expenditure negatively impacted performance.
Results in Uganda were also impacted following an internal audit that commenced in the first quarter of 2018. The audit identified a number of balance sheet write offs amounting to Ksh 315 million with no cash impact. The company however said that to ensure non-reccurence, the right technology, procedures and controls are being put in place.
Bamburi Cement also announced that Ksh8 billion capacity expansion projects in both Kenya and Uganda were fully commissioned on schedule and have undergone acceptance testing at the end of June 2018.
The capacity expansion accounted for most to the Ksh1.8 billion for capital expenditure. Part of the expenditure was financed by a Ksh1.4 billion loan received in Uganda.
Operating costs for Bamburi Cement shot up from Ksh15.9 billion over the first half of 2017 to Ksh17.3 billion over the same period this year.