Lafarge Kenya Sees Better Outlook as Profit Declines Again

Lafarge SA (LG)’s Kenyan unit said it will report an improved financial performance this year after posting a second straight decline in annual profit.

The company expects to benefit from higher regional exports and increased spending on infrastructure development in Kenya, Bamburi Cement Co., the country’s biggest producer of the building material, said in a statement today. Reduced electricity tariffs in Kenya and Uganda are also expected to ease the company’s cost burden, it said.

Bamburi posted a 25 percent decline in net income to 4.58 billion shillings ($53 million) in the 12 months through December, as sales slumped to 6.63 billion shillings from 8.98 billion shillings, the company said. Profit dropped 17 percent in 2012, according to data compiled by Bloomberg.

“Bamburi Cement Group expects 2014 to be a better year with easing political tensions in major inland Africa markets out of Uganda, as well as an improved business environment in Kenya which the company has already started witnessing,” Managing Director Hussein Mansi said in a separate statement.

East Africa’s cement industry has “great potential” because it has the highest level of intra-regional trade out of the four regional markets in sub-Saharan Africa, Renaissance Capital said in a research note yesterday. The region’s market of about 150 million people rivals Nigeria’s 170 million people and per capita cement consumption is the lowest on the continent, it said.

Regional Exports

Hima Cement Ltd., Bamburi’s Ugandan unit, exports to countries including Democratic Republic of Congo, Rwanda, South Sudan, and Burundi, according to Linet Muriungi, an analyst at Kestrel Capital East Africa Ltd., a Nairobi-based brokerage. Shipments to Congo, which account for 50 percent of Hima’s exports, were disrupted last year because of conflict in the east of the country.

Sales to Rwanda, which was accused of aiding rebels in eastern Congo, were also curbed by the conflict that has now ended, she said.

Shares in Bamburi have fallen 1.4 percent this year, underperforming a 2.5 percent increase in the NSE All Share Index (NSEASI) over the same period. The stock climbed 0.5 percent today to 207 shillings before the results were announced.

Renaissance Capital has a hold rating on the shares.

To contact the reporter on this story: Charles Wachira in Nairobi at cwachira@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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