Bamburi Cement Plc #ticker:BAMB is now the latest company to announce plans to increase prices of its products by between two and 10 percent effective March 10 due to higher cost of input raw materials.
The move is rare in the cement industry which had suffered declining prices over the years amid price wars as new rivals entered the market and others expanded their production capacity.
The company said in order to sustain its operations, prices of the Nguvu, Tembo and Fundi cement brands would be hiked. The price changes are expected to affect products from Nairobi, Mombasa, Limuru and Sagana depots.
Due to cost inflation, an increase in prices of building materials will raise the prices of housing units and construction of roads and other infrastructure in the country.
“The cost of input raw materials continues to increase disproportionately compared to what Bamburi Cement Plc can absorb,” the Nairobi Securities Exchange #ticker:NSE -listed firm said in a statement.
This has led the company to pass the burden onto the consumer by hiking prices of cement. The price of a 50 kilo bag of Bamburi Cement retails at a range of Sh600 to Sh770.
The increased prices will affect construction firms who use cement as a binder for sand and gravel. The raw materials needed to produce cement (calcium carbonate, silica, alumina and iron ore) are generally extracted from limestone rock, chalk, clayey schist or clay. Suitable reserves can be found in most countries.
Production of cement has outpaced consumption over the years, helping to tame prices. Data from the Kenya National Bureau of Statistics shows that cement consumption in the country stood at 7.5 million tonnes in the 10 months to October last year compared to production of 7.6 million tonnes in the same period.
Since the onset of Covid-19 the cement sector remained relatively unaffected by restrictions on movement into and out Nairobi and Mombasa, dusk to dawn curfew and bans on public gatherings that hit most sectors of the economy.
This saw Bamburi grow sales and post a 7.6 per cent jump in net profit to Sh776 million in the half year ended June 2021.
emwenda@ke.nationmedia.com
