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Tax liabilities related to the sale of Bamburi Cement’s Hima Cement Limited in Uganda weighed down profits made for the year ended December 31, 2023, necessitating a 120 per cent loss.
The end-of-year results released by the cement maker in Nairobi show it incurred a net loss of Sh399 million compared to Sh181 million profit earned in the previous financial year.
This weighed down a 160 per cent profit after tax earned by the Kenyan unit for the year.
Bamburi sold its entire 70 per cent stake in the Ugandan subsidiary, Hima Cement for an estimated Sh12.3 billion, a deal that was closed last month.
The penalties arose from a tax assessment from 2007 to 2011.
The firm has been battling a Sh1.2 billion tax pressure in Kenya and Uganda.
Early this month, the Nairobi Securities-listed cement maker issued a profit warning, an indication that net earnings for the year will drop beyond 25 per cent.
The period’s turnover rose by 6.3 per cent to Sh22 billion from Sh20 billion over the previous year – attributable to improved commercial strategy execution, increasing export sales volumes, and differential pricing for the company’s diverse range of products and solutions.
Despite tough operating conditions, the Group reported solid cash generation from operations, which increased to Sh2.89 billion as a result of improved operating profit and working capital.
According to Bamburi Cement CEO Mohit Kapoor, the year under review was impacted by cost pressures from new and higher taxation measures, rising inflation, and fast depreciating local currency, which disproportionately raised fuel, power and production costs.
He attributed the results to a strong focus on cost-cutting strategies, execution of commercial strategies and strengthening industrial and operational efficiencies.
“We effected stringent cost-cutting strategies on operations, and energy sources by using alternative fuels, and by lowering raw materials importation dependency,” Kapoor said.
“Our agility and speed in decision-making in the context of changing market dynamics helped us to execute strategic actions to deliver solid performance.”
The firm attributed industrial performance improvement across all Industrial Performance Benchmarks (IPB) contributed to the delivery of solid financial performance.
Kapoor said the company is targeting better results in this financial year.
“Our divestiture from the Ugandan market allows Bamburi Cement PLC to focus on the Kenyan market where we are positioned for record EBIT margins driven by our shift from volume to value.”
The board has recommended the payment of a first and final dividend of Sh5.47 per ordinary share amounting to Sh1.98 billion for the year ended 31 December 2023 as compared to Sh0.75 per ordinary share amounting to Sh272 million in 2022.
Bamburi Cement Group chairman John Simba said the firm’s strategic direction focused on the Kenyan business and is now well positioned to achieve profitable growth across all our businesses, fuelled by sustainability, innovation and operational excellence.
BY THE STAR