Rwanda’s leading cement producer, Cimerwa has managed to post a net profit of Rwf12billion, after years of making losses despite increased demand of cement on the local market.
Cimerwa made losses worth Rwf7.4 million as of September 2016, and in the following year Rwf5.5 million, and that increased to Rwf7.1 million in September 2018.
The present company’s financial statement in the financial year- September 2018 to September 2019, year-on-year (YoY), Cimerwa increased profits on it revenues moving to Rwf62.2billion from Rwf50.2billion, resulting into a 24% increase.
The profit comes after the company spent weeks in April 2018 doing minor maintenance upgrades at its Rusizi district-based plant which was producing below its actual capacity of 600,000 tons per year.
The plant was expected to produce at 400,000 tons after the 2015 major plant upgrade which cost about $3.3 million.
This created subsequent anxiety and rise in cement prices on the local market because the plant was producing below 70% (below 400,000tons), and many Rwandans turned to cement from Tanzania and Uganda.
Rwanda had to import at least 318,854 tons to meet the demand of 640,455 tons, according to the 2018 statistics from the National Bank of Rwanda.
“Currently we are able to produce above 480,000 tons per annum and we have gone from below 70% capacity to 80% against the plants full capacity,” said Bhekizitha W. Mthembu, the CEO of Cimerwa.
Mthembu was speaking at the Cimerwa 2018-2019 Annual Financial Report round table press briefing meeting held in Kigali this Thursday December 5, 2019.
Though the company plans on a target of reaching the 600,000 tons from 2021 by conducting another upgrade in mid-2020, Cimerwa CEO said that they cannot full satisfy the Rwandan market because of the increasing demand for cement.
Mthembu explained the earlier shortage was also caused by priority Rwanda government has out on infrastructure projects which demand a lot of cement and also the double digit economic growth in Rwanda is another factor that creates more demand for cement.
For instance, the majority of the cement produced in 2018, went on major government projects like the Kigali Arena, New Gasabo district offices and the new Prime Minister’s offices in Kimihurura among others.
Kigali Arena stadium alone had to get a supply of 1,000 tons every week for the six months construction demanded by the Turkish constructor (Suuma) who completed the project on time.
He also said that the same is expected to happen for the ongoing projects such as the Bugesera airport, and other model villages and affordable housing projects that are coming up in and around Kigali city.
On the sales side, Cimerwa Chief Finance Officer (CFO), John Bugunya, said that in 12 months period and they netted 20% sales volumes managing to produce 430, 730 tons from 357, 736 tons and recorded a gross profit increase of 55.5% YoY from Rwf10.8billion to Rwf16.7billion, thus making an increase of Rwf6billion.
Bugunya also said that Cimerwa Earnings before interest, tax, depreciation and amortization (Ebitda) increased from Rwf13.7 billion to Rwf19.3 billion which is a 41% growth and an increase of above Rwf5 billion.
“This growth is expected to remain constant when we look at our market position in the country against other competitors,” Bugunya said.
Cimerwa For Rwandans
With all this profit money, Cimerwa said that it will be reinvested in the plant capacity, Corporate Social Responsibility and new client centric products that will target making the Cimerwa a made in Rwanda product for all.
For example, Cimerwa plans on specifying cement types for all kinds of construction works, like bridges, roads, housing, and completely halting transportation of raw materials needed for cement production- to be done by local transporters not as in the past when it was done by Tanzanians.
In CSR, the Cimerwa marketing team said that the 25 Kivumu children football club in Muhanga district who recently appeared on social media in uniforms made out of Cimerwa cement bags, will be one of the beneficiaries.
“We gave them uniforms and footballs but now Cimerwa will also support and make these children as strong as the Rwandan franc- which was their desire- but also to groom future football stars like Messi among them,” said John Jovith Maridadi, the Cimerwa Marketing manager.
On the recent issues of Rwanda Government, a Cimerwa shareholder pulling out its shares (16.54%), Cimerwa CFO Bugunya revealed that this is a pure financial decision that can be taken anytime, but as of now stakeholders under guidance of Rwanda Development Board (RDB) are having discussion on the matter.
“From the discussions with stakeholders, this will not affect the plant activities, but discussions are still underway and RDB is holding them, but our view is that it is in the right way,” Bugunya said.