Athi River Mining profit up by 60 per cent

Athi River Mining profit up by 60 per cent
Published: 02 April 2008

Athi River Mining announced a 60 per cent growth in pre-tax profit for the year ended December 31, 2007.

Athi River Mining’s (ARM’s) profit rose from Sh387.8m in 2006 to Sh620.6m last year. It also announced plans to double its cement production capacity at a cost of Sh1bn. Projecting that cement demand in East Africa will increase from the current 5.5Mt a year to 11Mt in 2012, ARM said it would raise capacity from the current 300,000t to 600,000tpa by 2010. Work is already ongoing on the project.

Pradeep Paunrana, the company’s managing director, said demand for cement has continued to increase, because “borders have disappeared” in the cement trade, and cement from Kenya, Uganda and Tanzania is being sold to other countries, like Rwanda, DRC and Southern Sudan.

“With an annual 16 per cent growth rate in cement demand, the area (East Africa) will continue experiencing cement deficiency even if all investments by cement manufacturers in the region come into stream,” said Mr Paunrana. Bamburi Cement and East African Portland Cement are currently expanding their capacities, while Tororo Cement of Uganda is putting up a new factory in Athi River. During the year under review, the company’s turnover grew from Sh2.6bn in 2006 to Sh3.8bn last year, representing a 49 per cent growth.

“Our turnover and profitability for the year grew because improved production efficiencies, particularly in our clinker plant,” Mr Paunrana told an investor briefing held at a Nairobi hotel on Monday evening.

He said the company’s sales were not affected by January’s post-election violence and its sales in January (2008) outperformed those of October, November and December 2007. “We had put in place measures late last year, that enabled us to increase our sales in areas that were not affected by the civil strife,” explained Mr Paunrana.

2007 was ARM’s 10th year as a listed company on the Nairobi Stock Exchange (NSE), going back to July 1997. During this period, its turnover has grown from Sh35m to Sh3.8bn.

On the company’s outlook for 2008, Mr Paunrana expressed confidence that the political situation in the country would improve, once the coalition government took shape. “We expect all divisions of the company (ARM) to operate at capacity throughout the year,” he said.