ARM reports 33 per cent rise in pre-tax profit

ARM reports 33 per cent rise in pre-tax profit
Published: 03 November 2009

Kenya’s cement-maker Athi River Mining (ARM) recorded a 33 per cent rise in pre-tax profit for its nine month trading period ended September 2009 to Sh677m, the company said in its financial statements posted at the Nairobi Stock Exchange.

The profit announcement follows last week’s move by Bamburi, Kenya’s largest cement-maker and whose major owner is French firm, Lafarge, to sell 12 per cent of its 14 per cent stake in Athi River Mining.

Bamburi said it sold its shares in ARM to make money for its regional expansion.

Athi River Mining has production plants at Kaloleni, in Mombasa and Tanga in Tanzania.

Athi River Mining which produces 360,000tpa of cement said its turnover increased by 11 per cent to Sh3.7 billion signifying increased cement consumption in Kenya and the regional markets.

Competitors East African Portland Cement Company produces 720,000 metric tones annually while Bamburi produces 2.3 million tonnes every year.

At 360,000 annual production capacity, ARM controls five per cent of East Africa’s cement market but planned expansion at production plants in Kenya and Tanzania is likely to increase the company’s presence in the regional market.

Kenya’s cement consumption considered a key indicator of activity in the construction sector, increased by seven per cent from 2 million tones in 2007 to 2.2 million tones in 2008, according to the Economic Survey 2009.

The growth was mainly caused by increased government investments in infrastructure and the initiation of several Constituency Development Fund (CDF) projects and increased budgetary allocations for road construction, maintenance and rehabilitation activities.

The Economic Survey 2009 says the private sector also constructed housing units worth 12 billion in 2008 compared to 10 billion in 2007.

Analysts say these developments indicate increased consumption of cement in the country that could interest new investments in the cement industry.

However, ARM’s increased profits and turnover comes on the backdrop of increased electricity bills as a result of the shift to thermal generation following an acute power shortage as a result of reduced water levels at the hydrogenation plants.

The cement firm has started the construction of a Sh2.3 billion electricity generation plant that will help it cut its energy costs by more than 25 per cent.

Mr Rick Ashley, ARM’s chairman said recently that the new power plant that will use coal to produce 30 megawatts will be built in Kaloleni, Mombasa.