Profit statements

Rwandan cement maker Cimerwa doubles net profit to $ 3.9 million

By KABONA ESIARA

Rwandan cement producer Cimerwa’s net profit for the nine months ending in September doubled to $ 3.9 million, from $ 1.89 million for the same period last year, thanks to its new betting strategy. the market.

Revenue from the company’s cement sales reached $ 6.5 million from $ 6 million the year before.

“This excellent performance was driven by revenue growth as the company executed its go-to-market strategy to maintain market leadership as well as margins,” said John Bugunya, CFO of Cimerwa .

He added: “Conservative cost management initiatives have been implemented across the company, as evidenced by cost of sales which remains stable year over year. “

Cimerwa’s profits were hit by weak demand for cement due to a construction slowdown linked to the Covid-19 pandemic. Another challenge was the entry of a second local player, Prime Cement, as it increased competition in the national market.

Prime Cement plans to increase its production capacity to 80% utilization over the next four years, sending signals that competition for the market is about to intensify. Currently, the capacity of its plant is estimated at 0.6 million tonnes per year.

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This means that Cimerwa and Prime Cement will now compete for quotas in public procurement and retail market shares in Rwanda. Until recently, Cimerwa was the only local cement manufacturer, thus benefiting from the Buy-Rwanda-Build Rwanda policy.

In its financial statements, Cimerwa indicated that its income was boosted by supplies of cement for the construction of 22,505 classrooms, 31,932 latrines and 81 vocational schools.

DRC factor

The installed capacity of Rwanda’s combined cement plants is estimated at 1.2 million tonnes, but industry players say the country must rely on imports to cover the production gap.

Hima Cement Rwanda, a subsidiary of the Ugandan Hima Cement, is Cimerwa’s biggest regional competitor, but its activity is hampered by the closure of the Rwandan-Ugandan border.

Rwandan cement manufacturers also face fierce competition for the DRC market from regional players. Cement companies say other EAC states have already entered the DRC for part of the market.

“When the DRC starts implementing the EAC Common Market Protocol, the DRC will need to reduce taxes and remove trade barriers. This will help regional cement manufacturers in Uganda, Kenya and Tanzania compete for the market, ”Darius Do Santos, CEO of King Darius Investments, told The East African.

Reports indicate that the Ugandan cement market in DR Congo has reached 27,000 tonnes in the past two years, a growth of 30 percent.

“The volumes increased, when the [Rwanda] border closed, we were selling about 90,000 tonnes. But he has grown since then. The DR Congo market has grown by around 30 percent, ”said one of the exporters.