Rwanda cement maker Cimerwa doubles net profit to $3.9m
Monday December 20 2021
Cimerwa Cement has reported a $4 million profit in the nine months to September up from $2 million last year. PHOTO | FILE
Rwanda cement maker Cimerwa’s net profit for the nine months to September doubled to $3.9 million from $1.89 million in the same period last year driven by its new route-to-market strategy.
The firm’s cement sales revenues rose to $6.5 million from $6 million the previous year.
“This excellent performance was driven by growth in revenue as the business executed its route-to-market strategy so as sustain the dominant market share position as well as margins,” John Bugunya, Cimerwa chief finance officer, said.
He added: “Prudent cost management initiatives were implemented across the business as reflected in the cost of sales remaining flat year on year.”
Cimerwa’s earnings took a hit from weak demand for cement due to a slow down in construction over the Covid-19 pandemic. The entry of a second local player, Prime Cement, was another challenge as it increased competition for the domestic market.
Prime Cement plans to ramp up its production capacity to 80 percent utilisation over the next four years sending signals that competition for the market is set to intensify. Currently, its factory capacity is estimated at 0.6 million tonnes per annum.
This means Cimerwa and Prime Cement will now jostle for quotas in public contracts and the retail market share in Rwanda. Until recently, Cimerwa has been the only local cement maker, thus benefiting from the Buy-Rwanda-Build Rwanda policy.
In its financial statement, Cimerwa reported its revenues were boosted by cement supplies for the construction of 22,505 classrooms, 31,932 latrines, and 81 vocational education training schools.
DRC factor
Rwanda’s combined cement factories’ installed capacity is estimated at 1.2 million tonnes but industry players say the country has to rely on imports to cover production shortfall.
Hima Cement Rwanda, a subsidiary of Uganda’s Hima Cement, is Cimerwa’s biggest regional competitor but its business has been hindered by the closure of the Rwanda-Uganda border.
The Rwanda cement makers are also facing stiff competition for the DRC market from regional players. Cement makers say other EAC states have already entered DRC for a piece of the market.
“When DRC starts implementing the EAC Common Market Protocol, DRC will have to reduce the taxes and remove trade barriers. This will help regional cement makers from Uganda, Kenya and Tanzania compete for the market,” Darius Do Santos, CEO King Darius Investments, told The East African.
Reports indicate that Uganda’s cement market in DR Congo reached 27,000 tonnes in the last two years, a 30 per cent growth.
“The volumes have gone up, when the [Rwanda] border closed, we had been selling in the region of 90,000 tonnes. But it has since grown. The market in DR Congo has grown by about 30 per cent,” one of the exporters said.