ARM Cement's H1 profit up 20% - CNBC Africa

ARM Cement's H1 profit up 20%

Earnings

by Trust Matsilele 0

Kenya’s second-largest cement firm ARM Cement, has posted a 20 per cent increase in the group’s first-half pretax profit.

Buoyed by strong sales of cement and fertilizer, the firm recorded a 1.2 billion Kenyan shillings pretax profit while the revenue stood at 7.6 billion Kenyan shillings an increase of 16 per cent in comparison to the same period the previous year.

“The construction sector in Kenya has been significantly better than the first half in 2013. In 2013 the construction sector was slightly dampened that was essentially due to the elections which were ongoing and the results which were to come but in the first half of this year we have seen a significant improvement in the construction sector coming both from the housing segment as well as from the infrastructure segment,” Surendra Bhatia, Deputy Managing Director at ARM told CNBC Africa.

The firm’s company secretary Ramesh Vora believes ARM will grow further during the second half of the year with improved earnings before interest, taxes, depreciation and amortisation (EBITDA) margins upon commencement of clinker production at the Tanga plant. The EBITDA margin remained steady at 24 per cent in the first half of 2014 due to improvements in plant operations.

“Our Tanga plant is in the commissioning stage,” said Bhatia. So far, the company has invested 2.7 billion Kenyan shillings towards the completion of the Tanga plant and a further 12.3 billion Kenyan shillings in a clinker plant in Tanga, Tanzania and a cement plant in the capital of Dar es Salaam. Both plants have a combined capacity of 1.8 million tonnes per year.

“Our subsidiary in Tanzania has grown more than 30 per cent this year, compared to the same period last year. Our Tanzanian plant in Dar es Salaam is running to full capacity. Our cement is recognized us one of the top quality cements and is being used in all of sectors in the Tanzanian economy.”

Tanzania, ARM is aiming to nearly double its capacity to 4.1 million tonnes per year by 2017.

ARM is seeking funding to break ground for its 26 billion Kenyan shillings plant in the same region as Dangote’s cement in October. ARM is expected to build a 2.5 million tonnes per year factory.

(READ MORE: Kenya's cement market up for a stir)

The cement maker registered a 12 per cent before-tax profit for the 2013 financial year. The company also recorded a turnover of 14.2 billion Kenyan shillings compared to the previous year’s 11.4 billion Kenyan shillings.

The company has subsidiaries in Tanzania, South Africa and Rwanda as well.

In line with its expansion strategy, ARM fully acquired Kigali Cement in Rwanda early this month.

(READ MORE: ARM Cement takes on Rwanda)

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