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Topic: Kenya (Read 18304 times)
July 23, 2010, 01:18:58 PM »
East African Portland Cement Company managing director John Nyambok resigned on Thursday amid claims of disagreements in the boardroom.
Board chairman Mark ole Karbolo, wrote an email to employees about the departure following a board meeting held on Thursday afternoon, according to sources at the firm.
The board appointed the firm's finance chief, Kephar Tande, as the acting managing director.
The changes come amid alleged procurement fraud at the firm that has seen the suspension of the firm's procurement manager.
Mr Nyambok, 49, was appointed the managing director in June 2008 from Muhoroni Sugar Company where he served as the general manager.
He holds a degree in Electrical Engineering from the University of Nairobi and an MBA in Strategic Management from Washington University.
He becomes the EAPCC's sixth managing director in a span of seven year, with all of them save for one, having quit following differences with the board, which is under firm grip of the government.
Last Edit: August 09, 2010, 03:38:51 PM by Stealth66
ACTING CEO Appointed
Reply #1 on:
July 26, 2010, 04:23:30 PM »
EA Portland Cement Co. Ltd. appointed Kephar Tande as acting managing director, the company said in an e-mailed statement to the Nairobi Stock Exchange today.
26th July 2010
Reply #2 on:
August 09, 2010, 02:12:50 PM »
Kenya's Athi River Mining (ARM)
Reported a rise in first-half revenues and pretax profit of 19 percent and 16 percent respectively, compared with the year earlier period, and said expansion is on schedule. ARM's shares were up 0.6 percent, trading at an all-time high of 168.00 shillings a share, by 1120 GMT, on the back of a strong rally in the market. The NSE-20 benchmark index ended Friday's session at 4,674.31 points, up more than 5 percent for the week, and is near a two-year high, after voters adopted a new constitution that is expected to offer political stability.
Ranked the third largest cement firm in east Africa's largest economy, ARM said on Monday gross profit rose to 519 million shillings on turnover of 2.85 billion shillings. "There was good growth across all our product lines and costs per unit were lower due to internal efficiencies," Managing Director Pradeep Paunrana told Reuters. He also said a weaker Kenyan currency may have helped earnings from export markets.
The cement and fertiliser manufacturer said demand was expected to remain positive and that it planned to build more plants.
"The company has commissioned the cement expansion plant at Kaloleni (Kenya) and expects to commission (a $35 million) Athi River Plant (Kenya) in the fourth quarter of 2010," the firm said in a statement. Annualised earnings per share for the period rose 16 percent to 7.02 shillings. Earlier this year, ARM issued an equity linked note to raise funds for a 1.5 million tonnes per annum cement plant in Tanzania, which is expected to be completed in 2012. Bamburi, the number one cement-maker and a subsidiary of Lafarge, posted a drop in profit to 3.5 billion shillings for the same period.
Reply #3 on:
August 16, 2010, 01:09:25 PM »
Bamburi Cement (BAMB.NR) plans to expand its Uganda plant and double production to 480,000 tonnes to meet growing regional demand, company officials said on Thursday.
The Kenyan firm, which is majority owned by France's Lafarge (LAFP.PA), is also prospecting for more limestone in Kenya to increase its production.
"In Uganda, we are in discussion to double our capacity to produce cement. This entails doubling our capacity to produce clinker," Richard Kemoli, Bamburi chairman, told a news conference.
Clinker, the raw material for cement, is produced by baking limestone in a kiln.
East and central Africa is experiencing a construction boom that is boosting cement manufacturers.
David Njoroge, general manager for Hima Cement, Bamburi's Ugandan subsidiary, said the plant's expansion would take place over the next three years and cost about $108 million.
The company said it faced challenges such as bad roads and unreliable power.
"In Uganda and partly in Kenya, the cost and quality of power, which forms nearly 40 percent of our inputs into producing cement, are still a major constraint," Kemoli said while announcing Bamburi's first-half results.
The company posted pretax profit of 2.24 billion shillings ($33.53 million) up 15 percent from 1.955 billion in the same period last year.
Its shares closed on Thursday at 189 shillings, unchanged from Wednesday.
Kenya has two other cement manufacturers, Athi River Mining ATHI.NR and East African Portland Cement EAPC.NR, and as of 2006, the three companies had a capacity to produce about 2.4 million tonnes of cement per year, according to the East African Cement Producers Association.
Reply #4 on:
September 15, 2010, 12:27:22 PM »
Cement companies are bracing themselves for increased competition as new firms boost supply, a move that is likely to eat into their market shares.
An outlook report by African Alliance shows that Athi River Mining (ARM), Bamburi Cement and East African Portland Cement will feel the pressure of intense competition which will have a bearing on returns to shareholders.
"Although the outlook for cement demand is positive with an estimated annual growth of 12 per cent, we believe the commissioning of new production capacities of an additional 1.7 million tonnes per year to the current production levels of 6.9 million tonnes per annum in the next two years will result in a significant industry production surplus," said African Alliance in its industry report.
The analysis notes while all the three quoted cement producers Athi River Mining (ARM), Bamburi Cement and East African Portland (EAPC) will be under pressure, each player will face different levels of exposure denting their earnings.
Bamburi's challenge lies in the sizeable market share it has lost to competition especially new entrants such as Mombasa Cement which is estimated to have snatched 10 per cent of its initial market share.
Currently, Bamburi is estimated to account for 48 per cent of the local cement market.
In the first half of this year, its turnover declined by 17 per cent pulling its operating profit down by 23 per cent compared to a similar period last year.
Its disposal of its stake in ARM eliminated its other source of income.
In addition, due to the higher power charges it experienced cost inflation.
However, with the commissioning of its Uganda plant, African Alliance predicts an improved performance for the remainder of the year.
ARM is expected to continue performing well due to improvement in internal efficiencies and growth in all its business lines with the cement segment accounting for more than half of the group turnover.
"Turnover increased by 19 per cent on a year-to-year basis with the cement volumes growing by 28 per cent and high margins from the other segments."
However, ARM bottom line f aces fresh challenges of higher depreciation and interest costs on its capital expenditure which is expected to dilute the earnings.
ARM capex for the capacity expansion in its clinker plant in Kaloleni and Athi River cement production plant and the greenfield plant in Maweni Dar es Salaam is estimated at Sh12 billion.
Given its current high gearing levels-which is the ratio of debt to shareholder's equity- of 125 per cent the company is at high risk if its Tanzanian project should face prolonged delays or run ahead of budget, says African Alliance.
ARM may be hard pressed as it might have underestimated its production cost for the new plant.
ARM's budget is based on a cost of $70 per tonne of installed capacity versus an estimated industry average of $150 per tonne.
This means that its debt repayment is highly exposed as challenges on growing its market share under an increasingly competitive environment will impact heavily on the debt repayment programme.
East African Portland is swirling in management crisis following the resignation of Mr John Nyambok its sixth managing director in as many years.
The constant changes on its corner office, challenges of procuring clinker and exposure to the Japanese Yen denominated debt have largely stymied the quasi-state corporation from taking on its peers.
Despite commissioning a new grinding mid last year, a line which almost doubled its capacity to 1.3 million tonnes annually, the firm's trouble seems to be far from over.
The burden of it's the foreign debt has continued to nibble at its earning denying shareholders fair return on their investment.
The on and off privatisation roller coaster is sapping energy at a time when competition is picking up.
Reply #5 on:
October 18, 2010, 01:04:45 PM »
Kenya in what promises to loosen the grip of French multinational Lafarge on the regional market.
The real estate boom in East Africa and the revamp of the region’s infrastructure is creating demand for cement egging foreign investor interest.
The Asian companies are looking at the emerging markets such as Kenya as opportunities to side step the economic cycle of a single region.
So far, the firms in the region — Sanghi Cemtech and Catic Cement — remain start-ups.
Now, big players are looking at buying stakes in established firms such as East Africa Portland Cement Company (EAPCC) and Athi River Mining (ARM), industry executives and analysts say.
Some of the big names said to be eyeing Kenyan firms include Jedong Development Group, Gleen Investments and Aditya Birla.
Buyout interests from the Chinese and Indian firms are on the rise. We have been approached but we are comfortable with our present setup,said Pradeep Paunrana.
Two transaction advisers who cannot be named due to client confidentiality reckon that they have been tapped by Chinese firms to look for opportunities for buying block shares in EAPCC.
The government, which owns a quarter of Portland Cement wants to sell its stake but is yet to be decided if the shares will be sold to the public through the Nairobi Stock Exchange (NSE) or to a strategic investor.
Mr Paunrana ties the increased foreign interest to the rising demand for cement in Kenya, Uganda, South Sudan, Tanzania and Rwanda where constructions booms are underway.
For instance, data from the Kenya National Bureau of Statistics show cement consumption rose 15 per cent to 1.5 million metric tonnes in the six months to June compared to a year earlier.
Mr Paunrana added that the foreign legions are balking from starting operations and opting for acquisitions as they remove the headache of seeking regulatory approvals and fighting for market share against established rivals.
More importantly, the firms are looking at companies with access to critical raw materials, especially clinker — a key raw material made from limestone or coral mainly from the Coast.
With the market undergoing price wars, low operation costs are emerging as an arsenal for market share and profit growth as firms without mines buy clinker from third parties expensively.
Reply #6 on:
November 15, 2010, 01:48:33 PM »
Growth in sales for cement maker Athi River Mining outpaced surging financing costs to boost its profits for the nine months to September.
The company posted a 15 per cent jump in net profits for the period to Sh518 million compared to Sh452 million last year.
Turnover increased by 16 per cent to Sh4.4 billion, dampening the rapid increase in financing costs that grew by almost two-thirds to Sh2.6 billion.
ARM says that despite the increased financing costs, the company’s long-term prospects have improved after doubling capacity for processing of clinker- the main input in the manufacture of cement.
"The new clinker capacity has doubled to 750,000 tonnes per year," said ARM managing director Pradeep Paunrana.
The company’s expansionary strategy has increased ARM’s debts, pushing its interest expense up two-fold to Sh162 million.
Einsten Kihanda, a research analyst at Sanlam Investments, said that despite the more than double increase in costs of financing, ARM’s expansionary strategy fits well with its size since it is in its rapid-growth stage.
"Despite the firm spending huge amounts on meeting its financing costs, this is more than made up for by the returns that the big debts are generating through its enhanced production capacity," said Mr Kihanda. "The firm has not built enough reserves that can finance the fast-growth, it could only depend on debt financing," he added.
Investors reacted positively to the firm’s results, with its share price gaining four shillings to close at 175 in Friday’s trading.
Strong demand for cement presented by the booming construction sector, coupled with the company’s pricing strategy is propelling the company’s profitability even as its rivals record shrinking market shares and eroded profits.
Cement contributes to more half of the ARM’s revenues. It has a 10 per cent share of the local market, making it the third biggest cement maker behind Bamburi and EAPCC.
The company has been able to gain market owing to a pricing strategy that has given room for cost-cutting measures. ARM powers its cement production plant using coal and mines its own clinker, making savings of about a third on energy and cost of materials.
In May, the company raised Sh1.9 billion through the issue of an equity-linked bond in the local capital markets which was meant to finance the construction of a cement factory in Tanga, Tanzania.
This is after the maturity of the 5-year Sh800 million corporate bond issued in 2005 that has now been taken off its books leaving non-current borrowings at just below Sh8 billion comprising of bank borrowings and corporate paper.
On completion of the Tanga project, ARM will be the single largest cement maker in East Africa with a capacity to produce over 2.2 million tonnes per year as compared to the 360,000 tonnes produced for the whole year 2009.
Reply #7 on:
November 30, 2010, 12:49:33 PM »
Regional cement manufacturer, Lafarge Bamburi, has launched a new state of the art plant to manufacture pre-casts and ready mix concrete in an effort to enhance production capacity in Kenya.
The new plant will help boost the introduction of valued added products in order to better meet customer needs and to continue to lead the market in innovative solutions.
Speaking during the inauguration ceremony at the plant in Athi River, Bruno Lafont,Chairman and CEO of Lafarge said the Company is committed to innovation and growth in East Africa.
‘'This new facility combines both and reflects our strong belief in the economic prospects in Kenya. It will help us meet the growing demand in its construction sector with state of the art technology," he said.
Both businesses have shown growth in the country with the precast business projecting volumes of 535,000m2 in 2010, while the projected volume for the ready mix business is 27,000m3.
New precast and ready mix batching plants to be installed in 2011 will see the volumes rise to 855,000m2 and 40,000m3 respectively. This has been due to positive consumer response to the company's innovative products.
The products range from ready-mix concrete to other value-added products such as paving blocks, road kerbs, road channels, culverts, inverted block drains, wallpanels and hollow blocks have seen their demand grow.
Reply #8 on:
December 02, 2010, 03:04:56 PM »
French conglomerate Lafarge, it seems, is here to stay as far as its shareholding in East African Portland is concerned, at least for the foreseeable future.
The company, which owns Bamburi but holds stakes in its rivals in Kenya, says it will decide its fate in Portland after privatisation which, as things stand, appears long in coming.
Lafarge holds 41.7 per cent stake in Portland, while the government has controlling stake of 25.3 per cent and through a 27 per cent held by the National Social Security Fund (NSSF).
Bamburi last year diluted its 15 per cent stake in Athi River Mining in what was said to be a culmination of a boardroom war, but Lafarge chairman and chief executive officer Bruno Lafont rules out any divestiture soon.
"We are waiting the for the government's decision on privatisation of EAPC. That's what will determine our decision on EAPC," Mr Lafont told Smart Company in an interview last week. "At the moment we are not in a divesting mood."
Lafarge has in the past pushed for the two Bamburi and EAPC to merge or partner in the local cement market, but met fierce opposition from EAPC.
Analysts predict Bamburi might want to grow its stake in EAPC when its privatised to get control of Portland's management.
The government currently calls the shots, with appointing authority for the managing director, an influential and yet highly politicised post. Just like other parastatals, Mr Lafont says, the trouble with EAPC is management.
"Bamburi or Lafarge doesn't have any role in day-to-day running of EAPC, which makes it difficult to know what is going on. These are some of the assets we have no control over," says Mr Lafont.
In its full-year 2009 results ending June 30, 2010, Portland reported Sh292m loss, citing rising production and administration costs. This compares with a profit of Sh1.8 billion in the same period a year earlier despite growing its revenues by Sh1.3 billion to Sh9.4 billion.
Former managing director John Nyambok left in June in a huff after he fell out with the board. Part of the turnaround strategy for EAPC is privatisation. Two weeks ago, Industrialisation minister Henry Kosgey appointed Mr Kephar Tande as the new MD.
The cement market is tightening and the year ahead looks tough, with competitors focusing on price and value-addition. New entrants include National Cement and Mombasa Cement which are challenging the dominance of Bamburi, EAPC and Athi River Mining.
Devki Steel Mills Ltd's National Cement began operations early this month and new rival Mombasa Cement is building a huge clinker plant next to EAPC in Athi River.
The stiff competition has seen market shares change. Second-quarter statistics show that Bamburi's market declined from 62 per cent last year to 50 per cent, as EAPC increased from 18 per cent to 20 per cent.
Athi River Mining, which manufactures the Rhino brand, saw its market share remain steady at 10 per cent, while Mombasa Cement (Tororo), has seen its market share rise from 10 to 20 per cent.
"No one is a monopoly. This is a free market economy. Our goal is to be the best in the market," the Lafarge boss says, adding that to achieve this, it will seek to cut costs as it improves quality.
In the next five years, the group plans to boost capacity in Kenya, about a million tonnes from the current 2.5 million tonnes a year, to the tune of Sh10.7 billion (100 million euros).
"The increased competition is impacting temporarily on our market share, but those are just market forces. Things will change as we increase capacity," he says.
The biggest challenge for cement firms in Kenya is high production costs, especially energy. In Africa, Lafarge has invested in 15 countries, and Mr Lafont says the group has a strategy to invest 70 per cent in developing countries that show the highest potential for growth.
"There is huge opportunity for us to expand. We are witne-ssing changing demography, urbanisation and economic development," he said. He said consumption of cement per capita in Africa is still very low due to low gross domestic product in most of the countries. "Every country is unique with different opportunities and challenges," he added.
The East Africa Cement Association, the cement producers' lobby, estimates that surplus in the market will grow to 2.4 million tonnes in 2012 from the current 200,000 tonnes.
And analysts predict that going forward the market will remain more or less the same, except for the entry of National Cement (Devki Steel) which is likely to take up some market share from existing players.
According to the Central Bank of Kenya's latest Monthly Economic Survey for August 2010, cement production for the period January to July 2010 amounted to two million metric tonnes, 8.6 per cent growth from last year's 1.9 million metric tonnes
Reply #9 on:
January 27, 2011, 01:43:22 PM »
Cheaper pricing has won newly set up cement manufacturers about 14 per cent market share from their rivals, signalling a deepening shift in the industry that has for years been dominated by three producers.
Industry statistics by African Alliance Investment Bank show that Mombasa Cement and National Cement--both established in the past two years - now control a combined market share of more than a 10th of the local cement market.
Bamburi Cement, which accounted for 61 per cent of cement sold in the market in 2009, has seen its market share drop to 50 per cent, while East African Portland Cement Company (EAPCC's) market share has fallen by five per cent to 25 per cent.
Athi River Mining (ARM) has, however, recorded a marginal gain according to the African Alliance data, edging up by 2.5 percentage points to 11 per cent.
The three manufacturers are listed at the Nairobi Stock Exchange.
"The entry of these new cement makers has seen the bigger players cede significant market shares as their cement is cheaper," said Francis Mwangi, a research analyst at African Alliance.
National Cement is currently selling a 50 kilogramme bag at Sh660, EAPC Sh650 and Bamburi Sh700 on its regular brand--Nguvu.
Mombasa Cement's retail price is Sh600, while the lowest brand is ARM's rhino cement retailing at Sh670 per bag.
Mr Mwangi said the new players have stolen significant market share of the bigger players including Bamburi and East African Portland Cement Company, riding on a pricing strategy.
Mark ole Karbolo, the chairman of EAPCC, termed the new cement manufacturers' pricing strategy as "unsustainable," adding that the new players are not likely to uphold their price undercutting for long.
"You cannot offer a superior product at the price of a regular product and expect it to survive for long," said Mr Karbolo, whose firm is estimated to have lost about a sixth of its market share as per the African Alliance data.
Fortunes of the two new entrants have been buoyed by their established distribution networks, having already been players in the manufacture of other building materials including steel, nails and roofing sheets.
Mombasa Cement is owned by Uganda-based Tororo Cement, while National Cement is owned by Devki Group.
The holding company for Mombasa Cement, Corrugated Sheet, has been in the market for over a decade manufacturing a wide range of products under the nyumba brand, and has an established a distribution network across the country.
Devki on the other hand is a household name in the local construction industry after dealing in the manufacture and supply of steel bars and pipes.
Raval Narendra, the group managing director of the Devki Group, said his firm was keen on growing its market share to double digits this year.
"Our cement is superior because it dries fast and we are able to sell it at the same price, we are targeting a double digit market share this year," said Mr Narendra.
A boom in the construction industry has seen a sharp increase in the demand for cement, an opportunity that the new players rushed in to gain from by diversifying their product offering.
Data from the Kenya National Bureau of Statistics indicates that cement consumption for the first nine months of last year was higher by about 245,000 metric tonnes.
Mr Mwangi said the increased consumption meant a bigger pie for all the players, but how the market share would turn out is still likely to change this year since the players are still very new.
"We can expect some market shifts this year before the market finally settles," he said adding that the demand for cement is likely to increase even further.
Increased competition has seen older players diversify as they seek to cushion their earnings.
EAPCC announced plans to start making paving blocks and kerbs, following in the steps of the Bamburi which makes five variants of cement, paving blocks and plastering dust.
Surendra Bhatia, deputy managing director of ARM, said that new entrants are making big leaps due to use of new technologies.
He said newer mills have lower maintenance costs while they enjoy higher energy efficiency which helps them cut on their production costs and compete favourably.
"New technology can save as much as a quarter on energy costs which is very significant in cement production," said Mr Bhatia. Energy costs account for about a fifth the production costs of cement while clinker- a mineral input in cement manufacture account fro up to half of the costs.
Kaushit Pandit, the director of sales at Mombasa Cement, said his firm has been able to pass on savings on energy, clinker and distribution to the end consumer in the form of cheaper products.
"Competitive price to our customers is the only reason we have been able to grow that fast," said Mr Pandit, who said his company has more than 15 per cent of the market share.
Reply #10 on:
March 07, 2011, 05:38:16 PM »
Rising prospects for cement manufacturers and increased demand for the commodity in the region have pushed stocks of listed cement firms in Kenya to a new high.
Athi River Mining’s (ARM) shares are trading at an all time high of $2.4 per share at the Nairobi Stock Exchange, signalling an expansion in the region’s construction sector which has triggered fresh demand.
Since the beginning of the year, East Africa Portland Cement share price has gone up 36 per cent, trading at $1.47 per share on thin volumes.
Likewise, Bamburi Cement’s shares are trading at $2.48 per share reflecting a 5.7 per cent growth since the beginning of the year.
East and Central African countries are pumping billions of dollars into upgrading their infrastructure, raising the demand for building material which could still edge higher as the continent’s newest nation South Sudan begins reconstruction following a successful secession referendum.
The total cement capacity which also includes imported clinker is set to reach 11.6 million tonnes per annum in East Africa by the end of the year, from eight million tonnes per annum at the beginning of the year.
But the question analysts are asking is what investors are seeing in the cement makers to price their stocks so highly.
Take ARM for example. At a price of $2.4, the stock is trading at a price-to-earnings (P/E) ratio of 27, which simply means investors are paying 27 times for every shilling ARM earns to acquire the shares.
Value investors would keep off this stock in belief that a stock trading above 25 times its earnings is grossly overvalued.
But using P/E alone would be taking a one dimensional view of the stock.
“It would be difficult to say whether ARM is overvalued based on the P/E alone although there are indications that it could be, compared with the Bamburi stock which has a P/E of 11.11 and much superior dividend yield,” says Renaldo D’souza an analyst with Genghis Capital.
“On the other hand one could argue that they have strong upside earning upon completion of their plants in Tanzania which are due to happen this year and next year,” Mr D’souza adds.
The completion of ARM’s Tanzanian plant in Maweni, Tanga, is set for January 2012, according to the company, which would see it add 1.5 million metric tonnes in capacity.
This would take the total capacity to 2.5 million tonnes.
“We will be the biggest player in the market in the next 18 months,” says Pradeep Paurana, managing director of ARM. “There is no capacity in Tanzania hence ARM is putting up such a huge plant.”
In an interview with The EastAfrican Mr Paurana said the plant in Tanzanian will be fully integrated capable of producing 4,500 tonnes of cement a day.
With the Maweni plant coming on line, and the already existing one in Kaloleni in Kenya’s Coast Province, affords the cement maker to fire the locally available limestone with shale and iron ore at temperatures of about 1450oc — hence the importance of using coal to keep electricity costs low — to obtain clinker.
The clinker is then ground with gypsum to get cement.
Cement makers who do not have a fully integrated plant — the likes of Mombasa Cement, Devki Steel mills and Catic — have to import clinker.
However, some of the importation costs fluctuate making the production costs outside their control.
“We decided we want to control cost economies for our own production,” Mr Paurana said. “Whoever sells you clinker is making a profit and you are paying additional costs on top.”
The additional costs include freight, letter of credit insurance and port fees.
For example, the total landing cost (inclusive of port charges and 25 per cent duty) for a tonne of cement shipped to the port of Mombasa from Pakistan is $117.
But local firms such as ARM and Bamburi sell a tonne at $115 ex factory making their product competitive.
But the upstarts such as Devki Steel Mill and Mombasa Cement have taken on the established players by lowering their local prices per bag.
In Tanzania, the scenario is very different since a tonne costs $138.
Hence, Mr Paurana sees a huge opportunity should ARM be able to maintain its $115 per tonne pricing once the Maweni plant starts production.
“If we do not drop the price, imports will continue,” he says “Tanzania is picking up now, infrastructure is improving and the government has policies favourable to investment.”
Bamburi’s present capacity stands at three million metric tones per annum with Kenya’s production at 2.2 million while in Uganda, Hima Cement’s capacity doubled to 850,000 metric tonnes last year.
“We have only recently doubled our capacity in Uganda, which shows our desire to capture value coming as a result of growth opportunities in the region,” said Bamburi Cement.
“Currently our focus is enhancing our customer value through improved services and value added products as the region is already facing a surplus capacity.”
Uganda is one of the countries Bamburi is looking to, to grow its sales with South Sudan being the other.
If ARM’s capacity grows to 1.5 million tonnes per annum, some analysts see the rise in share price as a justification compared with the market capitalization of the three firms as a ratio to their capacity.
The respective figures are; ARM (26.71), Bamburi (24.30) and EAPC (8.23).
But if the new capacity for ARM is considered at the current share price of $2.4 then its ratio of market capitalization to capacity drops to 7.48.
Reply #11 on:
March 08, 2011, 03:31:20 PM »
Rivalry set to lower prices of cement
A 50 kg bag of cement currently goes at between Sh550 and Sh800 depending on the cement firm.
Kenya cement industry is set for bruising turf wars that might see a fall in cement prices.
This is due to increased cement stocks in the market brought about by new entrants and existing players expanding their capacity.
Speaking during the 3rd Africa Cemetrade on Tuesday in Nairobi, Athi River Mining managing director Mr Pradeep Paunrana said that players are increasing capacity adding that lately there has been enormous pressure on pricing.
“We are bracing for leaner margins and a tougher business environment going forward,” said Mr Paunrana, whose firm trades under Rhino Cement brand.
A 50 kg bag of cement currently goes at between Sh550 and Sh800 depending on the cement firm.
Mr Francis Mwangi, investment analyst at African Alliance Kenya Securities said the entry of new firms into Kenya will increase competition in the region’s cement sector, especially at this time when producers are expanding their capacities.
He said this will see market share for players change.
“Already the entrants have eaten into Bamburi Cement’s market share,” he said, adding that about two years ago, Bamburi controlled more than 60 per cent of the market, but currently it has slightly more than 40 per cent.
The year ahead looks tough with competitors focusing on price and value-addition
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