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The East African : June 23rd 2014
60 JUNE 21-27,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,825.52 0.23% (CUMULATIVE MOVEMENT) DSE All Share Index 22,155.98 2.82% Tanzania USE All Share Index Uganda 1,657.00 1.66% RSE All Share Index Rwanda 146.07 -0.24% JSE All Share Index South Africa 51,350.93 1.31% NGSE All Share Index Nigeria 41,138.97 -0.91% Bambu≥i to split Kenya, Uganda businesses B amburi Cement chief executive officer Hussein Mansi will step down next month as the company overhauls its management structure and separates its Kenyan and Ugandan businesses. Mr Mansi, who has headed Bamburi’s regional business for the past five years, will hand over the reins to Bruno Pescheux, country CEO Bamburi Syria. Fresh from the helm of the region’s largest cement maker, Mr Mansi will take up a similar role at Lafarge Egypt. In an internal memo to em- ployees, the cement maker also announced that its Uganda business — managed as Hima Cement Ltd and led by Daniel Pettersson as general manager — will now be led by Mr Pettersson as the Country CEO Uganda. Both the Ugandan and Kenyan heads will report to Lafarge’s executive vice-president for operations. The re-organisation is seen as a move to simplify decision making, helping the two plants to respond to market challenges more quickly. Over the past five years, Bam- buri’s market dominance has come under pressure from new entrants and expansion by its competitors, which has led to cement production in the region growing faster than demand, depressing prices. The drop in prices, coupled ways of controlling costs and thus growing margins as well as shielding the market from competition, especially from the impending entry of Dangote Cement, will be a priority. With Kenyan cement prices touching a 12-year low, according to data from the Kenya National Bureau of Statistics (KNBS), CemWeek, a magazine that tracks global cement trends, estimates that the region’s capacity will rise to 13 million tonnes per year by 2017 against a projected consumption of 6.3 million tonnes, meaning prices will come under even more pressure. The saving grace remains the low per capita consumption, estimated in the region at a paltry 50kg per year compared with a global average of 500kg. Mending relations with the with growing energy costs — power gobbled up 30 per cent, or $85 million, of the firm’s production cost of $291 million — has affected profit Re-organisation is seen as a move to simplify decision making, helping the two plants to respond to market challenges more quickly margins. For example, the firm’s net profit margin fell to 10.2 per cent last year from 11.8 per cent in 2012. Profits plunged by nearly half to $41 million last year from $79 million in 2009. The company has however maintained a handsome dividend payment policy, handing 85 per cent of net earnings back to shareholders in 2012 at $0.12 and $0.13 in 2013, representing 115 per cent of net earnings. For Mr Pettersson, seeking Bamburi Cement Group managing director Hussein Mansi at the firm’s Nairobi offices. Picture: Courtesy government will also be high up on the agenda of the incoming CEO. Kenya’s competition watch- dog has issued a damning report on Bamburi, accusing it of anti-competitive behaviour arising from Lafarge’s common shareholding and directorships in Bamburi and East African Portland Cement Company. The Competition Authority of Kenya is investigating Lafarge over breach of anti-trust laws, given it owns 58.6 per cent of Bamburi and 41.7 per cent stake in Portland. New low-cost ca≥≥ie≥s Jambojet and Fastjet flying high BUSINESS IS soaring for regional low-cost carriers with passenger numbers for the Kenya Airwaysowned Jambojet and Tanzaniabased Fastjet up as more people embrace their business model. Fastjet says it carried 43,020 pas- sengers last month, a 20.3 per cent increase from April and a 77.5 per cent jump compared with the same period in 2013. Jambojet says it will increase its weekly flights to Eldoret from 10 to 13 from next month. Fastjet says its passenger num- bers are growing faster than the expansion in aircraft capacity, suggesting that the load factor — the number of seats taken by fare-paying customers — is increasing. The two are expected to go head to head this year as both announced plans to enter the Kenyan and Tanzanian markets, respectively. Fastjet estimates that 40 per cent of its passengers in Tanzania are first-time flyers, which gives a picture of the expected rise in traffic when the two carriers start flying between the two countries. Their entry into the scene is ex- pected to increase flights in the region and create competition for legacy carriers such as Kenya Airways (KQ), Precision Airways and RwandAir, which charge relatively higher prices. National carrier KQ withdrew from the Eldoret route in March in favour of its subsidiary, which began operations on April 1. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories AMI mobile, Web platfo≥m to tap talent AFRICAN MANAGEMENT Initiative (AMI), a pan-African social enterprise, has secured a convertible loan of $750,000 from Lundin Foundation and Isibindi Trust to develop African talent, including in East Africa. AMI will build a Web and mo- bile platform and fund operational expenses as it scales up to reach 20,000 managers in 2014 and one million by 2023, according to chairman and co-founder Jonathan Cook. The first course on the new platform, Managing Markets and Customers, will be available online for free next month to managers across the continent. Meanwhile, it is being predict- ed that the East African region will employ more top management from the diaspora than locally in the next 12 months because of the lack of skilled labour in the market and the desire of companies to save on recruiting costs, according to research company EY. EY data indicates that de- mand for talent from the diaspora to Africa will rise to 29 per cent from 23 per cent.
June 16th 2014
June 30th 2014