Bamburi Cement, a significant cement firm in East Africa that is partially controlled by Kenyan tycoon Baloobhai Patel, is set to pay out a substantial dividend of Ksh1.99 billion ($15 million) to its shareholders for the fiscal year ending December 2023.
According to reports, Bamburi Cement has increased its dividend payout to shareholders by 7.3 times, achieving a historic milestone of $15 million for the fiscal year, demonstrating the company’s commitment to provide value to its stakeholders.
This step follows the firm’s strong financial performance in 2023, which resulted in an increased cash position, and it expects additional payouts in the following months from the proceeds of divesting its Ugandan business.
The proposed dividend payout represents a significant increase from the previous dividend of Ksh0.75 ($0.00563) per share, totaling Ksh272 million ($2 million). stockholders are expected to receive the higher dividend on or around July 25, with eligibility determined by stockholders on record as of May 24.
Bamburi CEO Mohit Kapoor credited the increased dividend to the company’s improved cash creation from operations, which increased 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 previous year’s net profit of Ksh181 million ($1.36 million), Kapoor emphasised that the distribution was driven purely by Kenya’s strong cash performance, which was unaffected by the Hima deal.
“This distribution has no relationship with the Hima deal,” Kapoor clarified. “This is solely based on an outstanding cash performance from operations in Kenya.” We have enough money to cover our working capital and capital expenditure requirements for this year, and we intend to create more.”
Bamburi Cement, which is known for pioneering construction solutions, has established itself as a leader in the East African cement business. The company’s magnificent Mombasa factory, one of the largest in Sub-Saharan Africa, represents its commitment to innovation and sustainability. Baloobhai Patel, a significant person in the company with a 4.12 percent interest through his investment firm Aksaya Investment, has been instrumental in promoting sustainability initiatives at Bamburi Cement.
Despite hurdles such as a net loss from terminated activities due to the sale of its Ugandan business, Bamburi Cement’s net profit from ongoing operations more than doubled in 2023. This strong financial performance has resulted in a significant increase in the company’s valuation, with its share price up more than 30% since the start of the year and market capitalization over $125 million.
Analysts expect Bamburi Cement’s share price to stay strong, boosted by the declaration of a larger normal dividend and the expectation of a special dividend from the Hima transaction cash flow. The timing of the special dividend, which was previously scheduled for 2023 but is now expected in the fiscal year 2024, is likely to have a positive impact on market dynamics, further strengthening Bamburi’s position in the market.