Two weeks ago, CIMERWA Plc released its interim financial results for the half year (6 months) period ended 31st March 2022.
The Company posted a record revenue of Rwf 44 billion, indicating a 45% increase compared to the same period last year.
With a Rwf 5.2 billion Net Profit, CIMERWA Plc closed the period on strong footing. This represents a +414% increase versus Rfw 1.0 billion achieved during the same period last year.
Company executives are optimistic that this good trend will be sustained in the second half of financial year ending 30thSeptember 2022.
Albert Sigei, the CEO of CIMERWA Plc, told Taarifa in an exclusive Interview about the factors keeping the company on a good trend, the resilience and risk mitigation strategies, top-notch corporate governance, healthy cash positions, its push for a purpose-led and performance-driven culture and more.
Q: Take us through your performance in the last six months?
A: Our topline grew by 45% compared to the last year, and our net profit grew fourfold to reach Rfw 5.2 billion.
And if you look at our retained earnings, these have also grown almost 5 times to Rfw 9.4 billion versus Rfw 1.9 billion in the previous year The cash position also closed on a healthy Rfw15.5 billion. We have kept our word to our shareholders and stakeholders and we are confident that we will keep the same track.
Q: How did you do it?
A: Firstly, we have a resilient organization that has been able to develop and execute strategies and risk mitigating actions brought on us by the COVID pandemic and supply chain volatility caused by the ongoing global crisis, including the current Russia-Ukraine war. Each crisis for us has been an opportunity to learn and build an even stronger Company that is able to adapt quickly and withstand external shocks.
Secondly, we now have a very strong team built over the last few years. I cannot thank enough our Board, Management and staff on the gallant efforts put in to achieve the results. At the core has been a strong drive towards a purpose-led and performance-driven culture through our culture change programdubbed JABALI. JABALI, meaning strong as a rock in Swahili, is anchored on six elements aimed at inspiring leadership at every level of the organization. It is critical in mobilization our workforce around the Company vision. The six elements are clarity of purpose and direction, structure alignment, resources and competencies, agile execution through effective stakeholder engagement, performance measurement and finally optimization through continuous improvement. These also inform actions on employee personal development and growth.
Thirdly, strategy is nothing without effective execution. We havebeen therefore focused on rigor execution which has borne fruit in critical performance-enhancing levers, hence the results above. For example, in the six months to 30th March 2022, we were able to increase our plant utilization and export volumes significantly. Agile execution has been an important part of the recipe in our accelerated pace of progress on performance.
Finally, we appreciate the supporting and enabling environment in Rwanda. This has allowed us to make progress under difficult circumstances. For example, interventions such as the Manufacture Build to Recover incentives and a strongly executed country vision has led to a healthy major projects pipeline which have been a crucial part of our topline during this challenging period when the general purchasing power of the Individual Home Builder is reducing. Examples include the New Bugesera Airport, Amahoro stadium and the new 100MUSD Kigali Financial Business Square which was unveiled at the recently concluded Commonwealth Heads of Government Meeting (CHOGM). We thank the Government of Rwanda and other stakeholders for the critical interventions that have cushioned the construction sector.
Q: How does that affect productivity?
A: Its effect is obvious, starting from these financial results we are discussing. A more effective execution means moving faster on various elements of our strategy. An important example of the productivity improvement is our plant capacity utilization which has ramped up in the six months up to 30th March 2022, reaching above 90%. This is a really a brilliant achievement coming from the team’s focus on effective execution of various strategic actions.
Another example is the boom of exports where we have grown sales by more than 60% compared to last year. This is one of our very important channels which now constitutes roughly 20% of our total sales volumes. It is also a direct contributor to the Country’s effort to bring in foreign exchange.
Q: You are confidently saying the coming months are going to be profitable for you?
A: The point I am making here is that, in spite of a challenging global context, the environment and initiatives in Rwanda give us the confidence to keep going knowing that the fundamentals are solid for the long term and there are adequate mitigating actions to help our sector against short term shocks. As such, the Company’s outlook is good with continued solid growth and performance based on an enabling environment and solid internal strategies. If you may recall, the last time we talked about our 2021 performances, Rwanda’s full year cement market growth stood at an estimated +20% and we are seeing some further growth on this. We estimate the total market to have reached more than 900,000 tons, taking Rwanda’s per capitacement consumption to about 65kg/capita.
These statistics speak to the strong potential in the Country and the Great Lakes region in general.
Q: Are you expecting to raise more funds on the stock exchange? Households are being affected by other dynamics; people’s pockets are being calculated.
A: The impact of the pandemic and current global volatility are definitely topical issues right now because wherever you are on a personal or company level you will feel the pinch in terms of cost and availability of some critical commodities. It is also bringing home the fact that we are truly globally interdependent with events in one corner of the globe rapidly affecting lives and businesses on the other corner. it has been eye-opening to note that Russia and Ukraine supply close to 30% of the world’s wheat requirement.
In short, we have already felt the impact as a country, as a region, as a continent and as a company. This has been through direct and indirect impact of increase in the lead time and cost of commodities such as fuel and equipment spare parts. I am sureyou have seen the announcements on the rising prices of fuel. What we have done as a company is to try as much as possible to mitigate the impact of these shocks from the global supply chain by working on reducing the cost of production and process / product innovation. As the only local integrated cement producer, and as a truly SIMANYARWADA brand, we are also maximizing the local content in our processes, hence keeping reliance on imported commodities to the minimum. We aim to optimize the cost of production in order to minimize the burden that is ultimately passed on to the consumers in the market.
Lastly, we are pursuing a diversification of our products and channels to the market. As indicated above, even though the individual home builders’ pocket has been hit hard, we can rely on the healthy projects pipeline and exports to wade through this difficult period and continue posting good growth. We have found export markets in the Great Lakes region to be quite resilient in spite of geopolitical issues over the years, Our strategic location in South Western Rwanda allows to tap into these market opportunities, especially Eastern DRC .
We do not have plans to raise funding through the stock exchange at the moment. As indicated earlier, we have a very strong balance sheet with healthy cash reserves and Net Debt of about Rwf 11 billion.
Q: What is the philosophy of the CIMERWA around the export segment to countries where you have your competitors?
A: In heavy manufacturing, there is something we call natural markets, where political boundaries are not given much attention. Of course, we follow border and other export guidelines but the most important factor in a heavy manufacturing industry like cement is logistics cost. We are strategically located compared to our competitors who would wish to bring their product from quite far to the Great Lakes region. Every one hundred Km that added on logistics cost introduces a major cost disadvantage to any heavy manufacturing player.
In a nutshell, our philosophy is to prioritize the needs of the Rwanda domestic market while tapping into the great potential of the export markets. Overall, it is time Rwandan businesses evolve into regional champions on top of being national champions. We must dream big!
Q: You spent quite a substantial amount of money during COVID because of the safety issues and health issues, you were incurring quite a lot. Now that COVID is giving us some space, where do you invest?
A: We have a consistent strategy that prioritizes Governance, Corporate Social Investments and the Health and Safety of our employees and partners. We have been doing this even before the onset of COVID and continue to do it. We invest close to Rwf 350 million on annual basis on this area.
