Materials makers reap big from construction boom

Workers build a house.
Workers build a house. The construction sector grew by 10.7% in Q1 2011. PHOTO/FILE
Makers of building materials are laughing all the way to the bank, thanks to boosted earnings from increased activity in the property market.

Manufacturers of cement, paints, steel products and galvanized iron sheets have recorded double-digit sales in recent years primarily due to increasing demand for their products.

Paint maker Crown Berger, Mabati Rolling Mills and East African Portland Cement (EAPCC) are among the construction materials firms that have recorded massive profits in the first half of 2011.

“Increased orders from the construction sector helped us grow sales by 20% in the first half of the year,” Rakesh Rao, the CEO of Crown Berger told Business Daily.

Crown Berger recently entered into a distribution partnership deal with Crown Paints of the UK.

According to the Kenya National Bureau of Statistics (KNBS), demand for cement and steel products is surging across the country – an indication that the anticipated property bubble is unlikely to burst any time soon. 

Data from KNBS show that production of galvanised roofing sheets stood at 136,673 tonnes in H1 2011, compared to 101,826 a year earlier, representing a growth of more than 30%.

Cement consumption, on the other hand, stood at 1.4 million tonnes in the first five months of 2011, growing by 19.2% from 1.1 million tonnes a year earlier.

The Kenyan construction sector is rapidly growing, thanks to the availability of credit for developers seeking to meet the growing demand for commercial and residential units in major towns such as Nairobi, Mombasa, Eldoret, Nakuru and Kisumu.

The sector grew by 10.7% in Q1 2011 – ten points more than the 0.3% growth recorded a year earlier.