Rwanda: Cimerwa Registers Rwf1.9 Billion in Profit

15 December 2020

Local cement manufacturer Cimerwa has registered an after tax profit of Rwf1.9 billion for the financial year ended September 2020, the firm's financial reports show.

The firm's revenue for the year grew to Rwf63 billion, which was a growth of about 1.5 per cent in comparison to the previous financial year.

While the year has been turbulent for most operators, Cimerwa's performance was buoyed by demand in cement for over 20,000 classrooms during the brief closure of schools to curb the Covid-19 pandemic.

The project saw Cimerwa supply over 80,000 tonnes of cement.

During the financial year concluded in September 2020, the firm produced and sold 421,000 tonnes of cement. While this is an improvement in comparison to the previous year, it is still below the 600,000 tonnes annually production capacity of the firm.

The improved performance of the firm earned Rwanda Revenue Authority Rwf6.7 billion in tax receipts.

The performance saw the firm foot a bill of about Rwf42 billion across the various suppliers with over 80 per cent going to domestic suppliers. The firm imports inputs such as coal from neighbouring Tanzania.

"There has been an increased demand by a number of large infrastructure projects in projects such as the classroom project, Kigali Road Network expansion, real estate projects among others. There has been a lot of drive to achieve the urbanization targets which has driven up demand for cement and consequently better performance for us," John Bugunya the Chief Financial Officer of the firm said.

The firm had two temporary interruptions in production this year, during a maintenance exercise and during the lockdown.

Cimerwa's monopoly as the only local cement producer ended this year with the debut of Prime Cement Ltd which put up a $40-million factory in Musanze District in the Northern Province.

The new firm, like Cimerwa has an installed capacity of about 600,000 tonnes annually but is yet to reach full production capacity.

However, even with the entrance of a second firm, Rwanda's cement demand is yet to be met locally as current demand is estimated at 800,000 tonnes per annum and is expected to grow by about 10 per cent year on year. That means that there is unlikely to be competition between the two firms in the short term.

In the last three quarters towards September 2020, officials say that Cimerwa has been producing at about 80 per cent capacity.

To further address market gaps, the firm still has to address challenges in supply to clients which experts say have seen some retailers and wholesalers hoard cement as well as inflation of prices.

On this, Albert Sigei, the Company's Chief Executive Officer said that they are working closely with the Ministry of Trade and Industry to curb hoarding and speculation.

"One of the other things that is critical is balancing supply and demand, there was a bit of an issue with that given the Covid-19 disruptions. Over the last few years, things have improved and prices have stabilized with the maintenance of supply," Sigei said.

In August, the firm was listed on the Rwanda Stock Exchange by introduction with 344,575,560 shares or 49 per cent will be available for trading. Each share costs Rwf120 and an investor can buy a minimum of 100 shares.

So far, Sigei said that 205,000 shares have been sold largely to local retail investors. Sigei however said that there has been interest among institutional investors who have been awaiting to review the annual performance to decide on investment.


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