Bamburi Cement, backed by Kenyan tycoon Baloobhai Patel, to distribute $15 million to shareholder

Bamburi Cement, a leading cement company in East Africa and partly owned by Kenyan tycoon Baloobhai Patel, is poised to reward its shareholders with a substantial dividend payout totaling Ksh1.99 billion ($15 million) for the fiscal year ending December 2023.

Reports indicate that Bamburi Cement has amplified its dividend payout to shareholders by 7.3 times, reaching a significant milestone of $15 million in the financial year, underscoring the company’s dedication to delivering value to its stakeholders.

This move follows the firm’s resilient financial performance in 2023, resulting in an augmented cash position, and anticipates further payouts in the coming months stemming from the proceeds of divesting its subsidiary in Uganda.

Bamburi’s dividend jumps, CEO credits cash surge

The proposed dividend payout represents a notable increase from the previous dividend of Ksh0.75 ($0.00563) per share, amounting to Ksh272 million ($2 million). Shareholders are slated to receive the enhanced dividend on or about July 25, with eligibility determined by the shareholders on record as of May 24.

Bamburi CEO, Mohit Kapoor, attributed the augmented dividend to the company’s improved cash generation from operations, surging to Ksh2.89 billion ($21.7 million) from a negative cash position of Ksh340 million ($2.55 million). Despite a net loss of Ksh399 million ($3 million) compared to the prior year’s net profit of Ksh181 million ($1.36 million), Kapoor emphasized that the distribution stemmed solely from the robust cash performance in Kenya, unaffected by the Hima deal.

“This distribution has no relationship with the Hima deal,” Kapoor clarified. “This is purely based on a fantastic performance on cash from operations in Kenya. We have enough money for our working capital and capital expenditure requirement for this year and we are also expecting to generate more.”

Dividend anticipation: Market optimism grows

Renowned for pioneering construction solutions, Bamburi Cement has positioned itself as a leader in East Africa’s cement industry. The company’s impressive Mombasa plant, among the largest in Sub-Saharan Africa, symbolizes its commitment to innovation and sustainability. Baloobhai Patel, a key figure in the company with a 4.12-percent stake through his investment firm, Aksaya Investment, has played a pivotal role in fostering sustainability initiatives within Bamburi Cement.

Despite challenges such as a net loss from discontinued operations due to the divestiture of its Ugandan subsidiary, Bamburi Cement’s net profit from continuing operations more than doubled in 2023. This robust financial performance has led to a surge in the company’s valuation, with its share price climbing over 30 percent since the beginning of the year and market capitalization surpassing $125 million.

Analysts foresee Bamburi Cement’s share price remaining buoyant, fueled by the declaration of a higher normal dividend and anticipation of a special dividend from the Hima deal cash flow. The timing of the special dividend, originally projected for 2023 but now expected in the 2024 financial year, is likely to influence market dynamics favorably, further enhancing Bamburi’s standing in the market.