Defunct refinery costs eat into KenolKobil's 2017 earnings
3 months ago, 14 Mar 11:06
Oil marketer KenolKobil’s #ticker:KENO net profit for the full year to December remained flat at Sh2.4 billion as one-off costs ate into the benefits that accrued from increased sales. The listed firm, which released its financials Wednesday, says the non-recurring charges of Sh1.3 billion cut back gains from a Sh55.2 billion increase in revenue to Sh158.7 billion. These one-off costs included a final Sh570.2 million impairment the oil marketer has been writing off as losses accrued from the defunct Kenya Petroleum Refineries Ltd (KPRL). “We expect no further provisions or expenses related to these matters. Absent these one-off costs, the business would have registered a net profit or about Sh3.4 billion,” David Ohana, the firm’s managing director, stated. The firm has for the past three years been writing off a Sh1.8 billion debt owed by the defunct refinery in an attempt to clean-up its books and boost the company’s future earnings. Defied slowdown The oil marketer recorded the higher sales despite the slowdown in the economy, with management attributing the increase in volumes to “strategic” partnerships with the world’s leading oil producers. Mr Ohana says high international prices further boosted the jump in sales, adding that he anticipates that prices will this year fluctuate between lows of about $58 a barrel and highs of $65. The oil marketer, which also has operations in Burundi, Ethiopia, Rwanda, Uganda and Zambia, closed the year with finance costs of Sh340.7 million compared to Sh354.7 million in 2016. KenolKobil closed the year under review having cleared its long-term borrowing while short-term borrowings remained flat at Sh7.3 billion. Mr Ohana explained that the firm’s net borrowing however stand at about Sh3.8 billion. The comoany's finance costs as of December were Sh340.7 million, representing a four per cent drop from the previous year’s Sh354.7 million. Management attributed this improvement to “better inventory and cash management strategies.” “Most of the cash generated by the business was employed in reducing debt, which combined with bank facilities restructuring contributed significantly in reduction of financing cost,” said Mr Ohana. Dividends If the final dividend is approved by the oil marketer’s owners at the annual general meeting slated for May 30, the dividend payout will mark a 33 per cent increase from the 45 cents per share paid out in 2016.
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