Bamburi, which is majority-owned by French cement giant Lafarge, has been running its Kenya and Uganda businesses as a single cluster but now the cement manufacturer is set to appoint chief executives for its Kenya and Uganda businesses in a restructuring exercise that will see the firm separate management of the two operations.
According to outgoing Bamburi chief executive Hussein Mansi, starting July 21, 2014, the Kenya-Uganda cluster will be managed as two separate country organisations each with a country CEO and executive team. He said this move is geared towards improving focus on Bamburi’s markets. Mr Mansi added that this new organisation will allow the business to successfully continue its transformation journey and achieve its ambitions by enabling greater flexibility in setting strategy and in responding to local customer needs.
The Kenyan business has three subsidiaries Bamburi Cement Ltd, Bamburi Special Products Ltd and Lafarge Eco Systems while the Ugandan unit is managed as Hima Cement Ltd.
Bamburi Kenya will be headed by new chief executive Bruno Pescheux, who is currently the country CEO for Syria while the current Hima Cement general manager Daniel Pettersson will be promoted as the Uganda business boss and he will oversee operations at Hima Cement which reported a 58 % drop in operating profit last year due to margin pressure in the Uganda domestic market, reduced exports, frequent power outages and rising energy costs.
Mr Pescheux faces the daunting task of growing Bamburi Cement’s earnings in a market where increased competition from new players such as Savannah, Mombasa Cement and National Cement has kept cement prices flat over the past decade.
Mr.Hussein Mansi will be posted to Lafarge Egypt while Mr.Bruno and Pettersson will both report directly to Tom Farrell, group Executive Vice President (EVP), operations.
The executive changes underline the Nairobi Securities Exchange (NSE)-listed firm’s quest to win back the highly competitive Ugandan cement market, whose underperformance was blamed for pulling down Bamburi’s net profit by a quarter last year. Bamburi reported that operating profit from the Kenyan unit remained flat last year due to lower demand in the first half of 2013, lower infrastructure spend as well as declining inland Africa exports.
There has been mixed results in Africa’s cement industry, despite growing demand as a result of the continent’s booming construction sector. Old Mutual projects that the East African region will experience an over-supply of cement by 2015, with the entry of new players and a further capacity enhancement by existing cement firms. This is expected to result in downward pricing pressures more likely to benefit consumers in the East African community, simultaneously raising concerns about the long-term profitability of the industry.