Kenya Power’s full-year earnings are expected to drop by 25 per cent, an indication of tough times the power supply monopoly is going through.
A profit warning issued yesterday indicated that financial results for the period ended June 2018 are expected to be lower compared to a similar period in 2017. It is a requirement that all listed firms issue a caution if their full year profit is expected to dip by more than a quarter compared to the previous year.
The firm recorded after tax profit of Sh7.27 billion in the year ended June 2017, meaning that it is expecting net profits in margins of Sh5.46 billion or below for 2018.
“The warning is based on the unaudited results for the financial year ended 30th June 2018 and the evaluation made by the board, with reference to figures and information currently available,’’ the company said in a statement.
The power supplier has blamed expected poor results to depressed economic environment, poor hydrological conditions, the prolonged electioneering period and the delayed review of retail electricity tariffs. Kenya Power had posted a six per cent increment in net profit to Sh7.43 billion for the year ended June 30, 2016.
Kenya Power share price at the Nairobi Securities Exchange has dropped by over 60 per cent in one year, worsened by alleged corruption scandals that saw senior managers arraigned in court in July. The power distributor’s share at the bourse opened the week at Sh4.05 down from Sh4.40 having shed Sh7.15 since August last year when it touched a high of Sh12.
Analysts have attributed the sliding of the share to high debt obligation and dented reputation that has seen investors offload due to recent power billing and corruption scandals that attracted public outcry. The firm’s board was forced to appoint several new senior managers in acting capacity following corruption and abuse of office allegations against the then managing director Ken Tarus, former boss Ben Chumo and several others.
Kenya Power’s financing costs rose 42.7 per cent or Sh976 million to hit Sh3.3 billion in six months ended December 2017, pulling down profits by 30.3 per cent even as the total revenue grew by 14.8 per cent to Sh67.1 billion.
Yesterday, the power vendor agreed to establish billing query counters across its commercial offices in the country where customers will have billing issues resolved in an out of court agreement with lawyer Apollo Mboya and electricity consumers. They also agreed not to disconnect electricity for its costumers for a period of 30 days in order to allow users sort power bills.