Bamburi Cement issued a profit warning announcement this morning. The company projects FY18 net earnings to be at least 25% lower than those reported in FY17.
- We expect EPS to slightly improve in 2H18 as most one-off balance sheet write-offs were not to recur in 2H18.
- The operating environment in 2H18 has remained largely the same as in 1H18 i.e. volumes are depressed, costs remain high and cement prices remain stable. Noteworthy, volumes had rebounded in August but this was reversed in September.
- Despite the decline in EPS, we still think Bamburi Cement will pay a final dividend since operating cash flows were positive and had grown modestly. In our opinion, we anticipate a dividend of at least KES 1.50 per share.
Credit: Kestrel Research