CIMERWA Plc, the only local cement manufacturer, recently announced payment of Rwf10.5 billion in dividends to shareholders, following a record Rwf92.1 billion in total revenues in 2022, a 37 per cent increase from Rwf67.4 billion in 2021. The New Times’ Alice Kagina had an exclusive interview with Albert Sigei, the CEO of CIMERWA Plc, where he weighed in on the company’s financial performance and market outlook. Below are excerpts: CIMERWA has made a profit before tax of Rwf16.9 bn in 2022, which is a 212% increase from last year, what do you attribute this to? Indeed, this was an amazing year with a very good performance. There are several factors that have enabled us to achieve these good results. Among them is optimization of our production processes. We have increased our production by about 100,000 tonnes and we are now pretty close to our capacity of 600,000 tonnes. In fact, where we stood with the sales of last year was more than 90 percent of utilization of that capacity as we still believe we can do even more. We have also worked on our costs through efficiencies and there are many initiatives such as alternative fuels like biomass which is not only good for the environment, but also for our cost base on the bottom line. We also tried to understand the movement of our product in the market while remaining competitive, but also being very efficient in the way we manage price as well as looking closely at our route to market by understanding channels to small and big retailers, construction, segment exports so that we can give the best service. Finally, we have managed to reduce our financing costs, we made a repayment of Rwf5 billion and as you may have seen in the results of our net Earnings per Share, our debt has decreased to about Rwf1 billion, which is a very good position because we have a very healthy cash reserve of Rwf20 billion. The good performance is also credited to our staff and a conducive business environment In terms of products, how much have you been able to produce and what was the consumption level? The Rwandan market has really grown very systematically supported by a strong vision and approach. Our estimate is that the market is getting close to one million tonnes. The demand is around 950,000 tonnes, give or take, and this represents something like 70 kilograms per capita up from 60 kilograms less than two years ago. Rwanda has made progress in construction and cement consumption in spite of everything that is going around. We have seen ourselves come very close to 550,000 tonnes which are more than 90 percent of our capacity and on top of this, we export more than 20 percent. Despite all the tensions in the region, those markets have been relatively resilient. The market is challenged with inflation, hasn’t this in any way affected consumption? It has been a very tough year for everybody across the globe and cement has not been an exception to that because we have seen logistics service providers coming to us and saying we need to discuss increasing the rate of transportation. And of course, we have had to accept some of that and hesitantly, forced to pass off some of that to the customer. So, the price of cement has also gone up just like for food, steel and other products. To avoid a very painful burden to our customers, we worked hard on our costs so that we don't have to pass a lot of increase to them. So, indeed, we have felt the pressure, responded with efficiencies, cost savings, and partly passed part of that increase to the customer. How do you assess the market in general, both domestic and international? When we look at global challenges such as Russia-Ukraine war, post-Covid impact, which have reduced purchasing power, our sector has continued to have a relatively good offtake. It could probably have been higher if we didn't have those sorts of issues, but I have to say, you know, it fared better than many other sectors. Looking ahead, we are optimistic that we will continue to see good growth and also we are seeing, fortunately, a fairly healthy pipeline of critical projects that need construction materials. The likes of Bugesera International Airport, the Amahoro Stadium refurbishment, among others. These are really helping us to have an anchor demand even if pockets of individuals as are getting hurt. On the international market, exports have remained resilient especially, in the Eastern DRC in spite of the regional stations, of course, there’s been some impact but generally speaking, we continued to see the business grow. On the other hand, we have seen some new markets like Burundi opening up. So, should the signs we have seen in the last two months continue, that should be good news for us as a new outlet to balance any other risk of other export destinations being impacted. After three consecutive years of making profit, you announced dividends payment, what informs this decision? It was quite exciting to do that and our shareholders have been very patient. So, with a good performance, as a management and board, we are really happy to take the step of recommending Rwf10.5 billion dividends. This is for the first time since listing in 2020. We wanted to make sure that our shareholders who have been patient for a while also get a return on their investment. It made sense because we had a great year, 37 percent growth in revenues to Rwf92 billion, more than 200 percent increase in net profit to Rwf13 billion, and more than 300 percent increase in retained earnings to Rw17.5 billion. Should shareholders be hopeful about the sustainability of dividend payments over the years? We’ve set a very good bar but on the back of a strong foundation. So, I am confident that it will not be just a spike but continued growth. What is key for us is that we are not just showing good operational and financial performance, but also consolidating our leadership position generally. For instance, we are really focused on environmental and social governance (ESG) in line with the SDGs. The company has reduced carbon emissions per ton of cement produced by 20%, how have you managed that and how far do you want to reach in achieving your target by next year? As I indicated, the ESG strategy is really core to us. On the environmental part, there are many initiatives including the target of planting about 20,000 trees every year and in the last two weeks, we have planted about 2,500 trees. In the pillar of decarbonization strategy, we are looking at ways of production that result in less carbon per tonne in each bag of cement and we are currently substituting materials by about 15 percent but we hope to trend upwards. We have also looked at other sources of energy that are renewable, such as solar energy. These have enabled us to make that 20 percent gain over the last years but we look forward to making further gains in the coming few years. I am also happy to mention that we are the only heavy manufacturing company in Rwanda to have an ISO certification called the integrated management system covering environmental management, occupational, health, and safety as well as quality management systems. So, this is a testament to the focus that we have in terms of the impact of our activities on society. What are your goals for the coming year in terms of profitability and consumer satisfaction? I said, we have set a high bar but with a strong foundation. So we are very confident about the foundation. We are very confident that we will continue delivering a great customer experience with diversified products that are fit for purpose and also good value for money for the customer. Overall, we continue being focused on delivering on our brand policy of strengthening Rwanda.
