NSSF to exit Bamburi Cement

NSSF to exit Bamburi Cement

Vikas Damle

National Social Security Fund (NSSF) is set to sell its shares in Bamburi Cement on claims that the share has a dim outlook, a move that had led the cement firm to remove the pension funds manager from its board. NSSF, which has a 14 per cent stake worth more than Sh10.5 billion, said it was cutting back its shares at the firm arguing that the rising competition in the sector was likely to hurt Bamburi's growth. The price of a 50 kg bag of cement has dropped to a low of Sh600, from Sh660 in December 2010 in Nairobi, and executives in the sector expect further price cuts in the coming months on increased stock of cement in the market arising from new entrants and increased production by existing players. It's this outlook that has prompted NSSF to cut back its interest in Bamburi Cement in a business environment that has seen East Africa Portland Cement Company's (EAPCC) before tax profit drop 41 per cent to Sh254 million in the six months to December 2010, despite growing its revenues to Sh5.2 billion from Sh4.8 billion. But NSSF, which holds a 27 per cent stake in the firm, said they had no plans to cut back their stake in the firm. Analysts led by African Alliance said the price war will intensify with French multinational Lafarge, which has a 71 per cent stake in Bamburi and 41 per cent in Portland cement, emerging the biggest loser. African Alliance said Lafarge's interest in the East African region will reduce from the current 61 per cent to 30 per cent in 2015 on increased activity from the new entrants such as Mombasa Cement and National Cement.

Indian Cement Review