Kenya cement makers are facing tough times if the recent financial reports are anything to go by.
Early this year, East African Portland Cement Company (EAPCC) announced that its net loss for the six months to December 2017 had worsened nearly four times to Ksh969.6 million ($9.6 million) on lower revenues.
The company attributed the revenue drop to the politics-driven slowdown of the Kenyan economy last year.
Bamburi Cement on the other hand posted a 66 percent drop in their net profit to Sh1.97 billion for the year to December 2017 compared to Sh5.8 billion previous year.
Like EAPCC, the Management at Bamburi Cement which is part of the Lafarge Group, attributed the drop to lower sales in Kenya following the prolonged election cycle, tightened liquidity, and delayed projects.
ARM Cement which makes the Rhino brand also posted a loss of $35 million in 2017 compared to a loss of $28 million in 2016 and $28.9 million in 2015.
Kenya Cement makers are however betting on the anticipated rebound of the real estate sector and government promise to build at least 500,000 affordable new houses to Kenyans by 2022 to regain sales and boost their performance.
But manufacturers are worried of unhealthy higher coal and power prices in 2018.Unhealthy competition is also being blamed for dwindling fortunes among cement makers in the country.
“The cement being imported into the country is substandard and below the normal 50 kilogrammes. This is killing the local industry and I do not understand why the Kenya Bureau of Statistics and Kenya Association of Manufacturers are not taking action on the regional manufacturers,” Devki Group chairperson Narendra Raval said recently.
In anticipation of projected high demand for cement, some companies are in the expansion process to boost their capacity.
Mr Raval for instance is raising $97 million in the form of debt and equity from the International Finance Corporation to fund the construction of new cement plants for his company the National Cement.
National Cement’s new plants will significantly increase the cement maker’s output and drive down cement prices, while cementing the company’s position as East Africa’s dominant cement manufacturer.