ARM Cement cut full-year loss for 12 months through December 2016 by 3.14 per cent, the country’s third largest cement maker by market share announced yesterday. The firm, whose shares trade on the Nairobi Securities Exchange, said loss reduced to Sh2.8 billion in 2016 from Sh2.89 billion the year before. ARM experienced strained cash flow throughout the year as well as increased competition and lower selling prices, especially in Tanzania.
“The Tanzania business environment continued to worsen during the year,” ARM Group managing director Pradeep Paunrana said in a statement.
“While electricity supply normalised, the Tanzania government’s ban on importation of coal, in favour of local procurement, not only increased manufacturing cost but also impacted on proper capacity utilisation of the 4,000 tonnes per day clinker plant at Tanga due to chronic under supply.”
During the period, ARM plants in Tanga and Dar es Salaam had an operating capacity of about 50 per cent each. The firm, by way of new equity of Sh14.1 billion issued to the UK government-owned CDC Group, eased the debt burden on its books in October 2016.
ARM’s operations in Kenya remained buoyant after the company increased production and sales volumes from the third quarter of the year by more than 10 per cent.
“The construction sector in Kenya has remained buoyant and cement prices remained stable whilst volumes grew at over 10 per cent during 2016,” Paunrana said.
“In light of the aggressive capacity expansion underway, the region’s capacity surplus will result in sub-optimal utilisation rates, hence raising operational expenditure and compressing margins among cement producers, especially given the region’s price stagnation,” the report stated.
The 2017 economic survey launched by the Kenya National Bureau of Standards shows that the building and construction industry registered a slower growth of 9.2 per cent in 2016 compared to 13.9 per cent in 2015.
The growth was partly attributed to continued activities of SGR construction works and road works by both national and county governments. KNBS data shows that cement consumption went up 10.5 per cent from 5.7 million tonnes in 2015 to 6.3 million tonnes in 2016.
Bamburi Cement, the country’s largest cement manufacturer, posted a 0.30 per cent growth in after tax profit for the 2016 fiscal year to Sh5.89 billion up from Sh5.87 billion in 2015.
Bamburi is controlled by France’s conglomerate Lafarge, which also holds some shareholding in East African Portland Cement.