Bamburi Cement has issued a profit warning, indicating that the 2018 full year profits could go down by more than 25 per cent.
The cement manufacturer attributes the slump on difficult market conditions as well as escalating international energy prices in both Kenya and Uganda.
The decrease in profits is also attributable to increasing power costs in Kenya as well as additional provisions, mainly receivables, in Uganda as causes of the decrease.
“This announcement is based solely on the company’s preliminary assessment of the group’s expected financial results of the year 2018,” reads a statement from the company secretary.
The company’s results will be announced in the first quarter of 2019.
In 2017, Bamburi’s profits dropped by Ksh3.9 billion to Ksh1.97 billion owing to lower sales in the Kenyan market.
Bamburi blamed the electioneering, the rate cap and drought for its reduced performance.
In May, the Central Bank of Kenya (CBK) governor Patrick Njoroge revealed that the real estate sector was the largest contributor to non-performing loans (NPLs) along with trade and manufacturing firms.
The real estate sector is he biggest consumer of cement, suggesting that the slowed uptake of the real estates could be contributing to financial woes facing cement manufacturers.
“The ratio of the non-performing loans to gross loans increased to 12.4 per cent in April from 11.4 per cent in February 2018 largely due to increased NPLs in the real estate, trade and manufacturing sectors,” said Dr Njoroge.
Recently, cash strapped Athi River Mining was placed under administration following a series of loss making years, with this year’s loss escalating to Ksh6.5 billion.
ARM has also been suspended from trading on the Nairobi Securities Exchange following its placement under administration.
The company was suspended from the market on August 20.
United Bank of Africa (UBA), one of ARM’s creditors appointed PricewaterhouseCoopers’ (PwC) Muniu Thoiti and George Weru as joint administrators.
ARM owes creditors more than Ksh14.4 billion, and the administrators are crafting ways to return the company to profitability.
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