Bamburi targets market share growth with low-cost cement

Bamburi Cement #ticker:BAM has launched a low-cost cement targeted at single-storey structures in its fresh bid to grow market share. 

The cement, called ‘Bamburi Fundi,’ will mainly be used for block laying, repair works as well as internal and external plastering.

A 50-kilogramme bag of Bamburi Fundi will retail at about Sh540 in Nairobi, which is lower than the Sh560 and Sh610 paid for Bamburi Tembo or Bamburi Nguvu in the capital.

Both Tembo and Nguvu are for works that require stronger structural frame like multi-stored buildings and pillars.

The cement maker has in recent years lost market share to privately-owned Savannah Cement and National Cement.

Managing Director Seddiq Hassani says plastering works take up to 40 percent of cement consumed in construction, adding that ‘Bamburi Fundi will lower the cost of production.

“The newest product will meet the emerging needs of customers in having affordable cement in construction. The launch is driven by clear demand for masonry-only cement,” said Mr Hassani.

EARNINGS

Bamburi Fundi broadens the range of cement types offered by the Nairobi Securities Exchange-listed firm that has been operating in the country since 1954. Other cements are Nguvu, Multipurpose, Supaset, Tembo, Powermax, Powercrete and Roadcem.

The new product is is expected to support Bamburi’s earnings at a time cement consumption has declined and stiff competition has depressed prices.

Bamburi’s half-year sales to June 2019 grew marginally by 0.54 percent to Sh18.66 billion to keep net profit flat at Sh393 million. This was on account of contracted cement market in Kenya.

“The high debt in the country has seen key government projects like SGR and Mombasa-Nairobi highway frozen or scaled down. This has had an impact,” said Mr Hassani.

Bamburi’s export market was also hurt by closure of the Uganda-Rwanda border, which made Rwandan market inaccessible in the six months to June.

However, sales director Kanyi Gitonga says there has been inroads in Zanzibar, Pemba, Rwanda, Tanzania and South Sudan, brightening the outlook.

“We see the export market starting to pick up in these countries as wells DRC where there is a lot of mining going on, leading to higher demand for specialised cement,” said Mr Gitonga.