Europe / Middle East / Africa
Cement plant opening helps ARM Cement profits jump
Oct, 24 2012
(Nairobi, Kenya) -- ARM Cement, Kenya's second-largest cement company, said it can look forward to a strong year after its recently opened Dar es Salaam cement plant helped boost sales.
ARM, behind Bamburi Cement in production capacity, said on Monday, in the first nine months pretax profit rose to 1.2 billion shillings ($14.1 million) from 296 million, while turnover jumped 29 percent to 7.74 billion compared to the same period the previous year.
Construction has been one of Kenya's fastest growing sectors over the last decade, fuelled by a burgeoning middle class with higher disposable incomes. Returns on investment in the sector have outpaced that of equities and government securities.
"The company remains optimistic about the business environment in the (east Africa) region, and expects the growth in demand for (its core brand) Rhino Cement and other products will continue," ARM said.
The boom in construction has coincided with a fall in lending rates across the region as inflation has eased.
Analysts were positive on ARM's future earnings as the region's construction sector grows.
"The biggest driver of turnover in the fourth quarter will be Tanzania, and that will continue to push its share price up," said Kuria Kamau, a research analyst at Kestrel Capital.
The company, which changed its name from Athi River in July, has also invested $140 million in Tanzania. It said work was ongoing on another 750,000 tonnes plant there and a 1.2 million tonnes per year clinker plant in east Africa's second biggest economy.
The Tanzanian projects were partly funded through a six-year convertible loan of $50 million from Africa Finance Corporation (AFC).
ARM made 42.8 million shillings in unrealised foreign exchange gain in the third quarter of 2012, up from a 681 million shillings loss last year, after the local currency lost about 25 percent of its value in 2011.
($1=85.1500 Kenyan shillings).
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