Bamburi set for further gains

Bamburi Cement Limited, Kenya’s biggest manufacturer of cement and cement related products, recently celebrated 50 years since it first commenced operations.  It was incorporated in 1951, and listed on the NSE in 1970. In addition to cement products, it owns a nature and environmental park developed from rehabilitated quarries.  The company operates in Uganda and Kenya and markets its products in the Great Lakes region. 

In the last five years, annual compounded increase in revenue was 9 percent, recording Sh10.4 billion, credited to higher domestic consumption and export volumes to inland Africa, mainly Uganda. Earnings increased by 11 per cent, to Sh2.94.  In 2003, return on shareholders equity was 9.3 per cent, down from 11.2 per cent in 2002, of which 7.3 per cent came from operations and two per cent from borrowed funds. The outstanding shares were 362.9 million, of which the ten largest shareholders controlled just over 93 percent and public float was 24.3 million shares. 

Bamburi has the cement "franchise" of Kenya. The combined shareholdings in Athi River Mining Limited and E.A. Portland Ltd, gives the company dominant position in the market. Added to this "franchise", Bamburi is a subsidiary of Lafarge.

The Group is expending energy and resources to be "consumer focused company". It is branding product by application, rather than the traditional ingredients based description. This makes the buying process simpler, because consumers do not need to know technical product specifications. To enhance customer service, the company has a "Building Information Centre", a one-stop information and product development centre. In the long-term, this added value will create customer loyalty and market share, which will contribute to future earnings. 

Building concrete roads and housing construction will be key factors in driving 33 percent growth in earnings.  The risks to the future growth of the earnings include interest rates, energy prices, the exchange rate, external competition and lack of Government spending. Of critical importance is the high price of energy, which represents over 40 per cent of production costs. Energy costs up to four times more in Kenya and Uganda than countries such as Egypt.