NSE firms shed Sh14bn in half-year earnings
1 weeks ago, 06:42
More than one third of the companies listed on the Nairobi Securities Exchange (NSE) have collectively shed Sh14.75 billion in provisional and final results so far announced in 2018, even as banks posted a total of Sh87.8 billion in profits, revealing the disconnect between the borrowing economy and the lending institutions.
The latest market data shows that 23 firms registered losses or a decline in profits in the first nine months of the year, even as bank profits grew 13.5 per cent to Sh87.8 billion.
Two of the companies, Athi River Mining (ARM) #ticker:ARM and Deacons East Africa #ticker:DCON, went into administration, choked by a heavy pile-up of debt and a slide into loss making.
This performance is being seen as showing that most companies have yet to overcome last year’s election jitters and the depressed credit market that has seen banks abandon lending to the private sector in favour of buying government securities.
It also runs contrary to official findings that Kenya’s business environment has consistently improved in the past three years, causing the country to move 19 places from position 80 to 61 on the World Bank’s ease of doing business index.
Bamburi Cement #ticker:BAMB on Monday issued a profit warning that will potentially take its profits to a 12-year low, joining the growing list of companies that expect their earnings to fall by more than a quarter from previous year.
The cement maker attributed the dip in profit to difficult market conditions characterised by escalating energy prices in both Kenya and Uganda as well as increased power costs.
Bamburi’s half-year profits shrunk 4.6 times to Sh399 million from the previous half year’s Sh1.84 billion, meaning it must generate at least Sh601 million in the second half of the year to remain within the billion-shilling profit range.
Last year, Bamburi also cut total dividend per share by 67 per cent as profits tumbled by the same margin.
Its competitor, ARM Cement, was in August placed under administration to shield it from creditors, having posted four years of losses.
Electricity distributor Kenya Power #ticker:KPLC also issued a profit warning as its earnings plummeted to a record 10-year low of Sh1.9 billion for financial year ended June 2018, a 63.7 per cent decline from the previous year. The firm is not paying any dividend.
Sameer Africa #ticker:FIRE also issued a profit warning after its turnover dipped by 31 per cent in nine months, putting it en-route to closing the year with less than Sh1 million in profits.
Fashion retailer Deacons East Africa last month sank into administration, forcing capital markets regulator to suspend it from trading on NSE.
Its half year losses widened to Sh229.5 million in June compared to Sh180.4 million last year as revenues fell by more than half.
Williamson Tea Kenya #ticker:WTK posted a Sh85 million half-year loss, down from the previous year’s profit of Sh43.4 million as Kapchorua Tea’s losses widened more than five times to Sh76.5 million.
This is despite government touting agriculture to help the economic growth rebound to 6.3 per cent because of improved weather.
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