Athi River Mining profits rise to Sh$175m

Athi River Mining profits rise to Sh$175m
Published: 03 August 2006

Athi River Mining’s half-year profits went up by 41 per cent in the six months ending June this year. The company made Sh175.5m, up from Sh124.7m in the same period in 2005. Turnover grew by 25 per cent to Sh1.24bn  from Sh995.7m  in a similar period in 2005.

This was driven by increased use of the existing capacity in firm’s capacity in Tanzania and South Africa subsidiaries.

In South Africa, cement consumption has gone up steadily as the government invests billions of rand in infrastructure in preparation for the 2010 soccer World Cup. In Kenya, cement sales remained constant at 33 per cent of the turnover due capacity limits which are now being addressed. A new Sh1.4bn clinker plant begins commercial production in September this year at Kaloleni, Coast province.

Earnings per share went up by 36 per cent to Sh1.18 from Sh0.37 in the same period in 2005. The total assets of the firm stood at Sh3.5bn with the total borrowing of the company at Sh1.6bn. "The company hopes to maintain and improve its performance for the rest of the year," said the company in a newspaper advertisement published yesterday.

In May, this year ARM managing director Pradeep Paunrana said the cement industry is likely to record a 6-7 per cent growth in production. In 2005, cement consumption grew by 10.9 per cent to 1.57Mt from 1.4Mt in 2004.

But cement firms continue to complain about the cost of power, contributing over 40 per cent to the total cost of production. The other cost that has been going up is that of transportation due to poor infrastructure and the increasing oil prices. ARM normally imports coal from South Africa, but transporting it from Mombasa increases the costs considerably. The setting of the clinker plant at Mombasa should partly solve the problem.