Multinationals’ dividends from NSE drop by Sh10bn

Dividends paid out to multinationals for their controlling stakes in Nairobi Securities Exchange-listed firms are set to drop by 21 percent this year as a few blue-chips reduced their payouts by significant amounts.

Multinational firms including Vodacom Group, Diageo Plc, WPP Plc and BAT Plc have received or are set to get a total of Sh38.4 billion based on the latest distribution announcements.

This will be Sh10.2 billion lower compared to last year’s payout of Sh48.6 billion, but a boost to the cash flow of the mainly European-based multinationals who are freezing dividends and shoring up reserves as the coronavirus pandemic threatens to tip the world into a deep recession.

The reduction could be mitigated if East African Breweries Limited (EABL) #ticker:EABL pays a final dividend for the year ending June. The brewer last week issued a profit warning, suggesting that its net earnings for the year ending June are likely to decline by 25 percent compared to the previous period, hurt by coronavirus.

Safaricom #ticker:SCOM, BOC Kenya #ticker:BOC, Bamburi #ticker:BAMB, BAT Kenya #ticker:BAT and Liberty Holdings #ticker:CFCI were among the NSE-listed companies that suspended or reduced their payouts in their latest results, lowering cash returns for their parent firms.

Safaricom is set to pay Vodacom Group and Vodafone Plc —its top shareholders with a combined 40 percent stake — a total of Sh22.4 billion on November 1 based on its performance for the year ended March. This represents a reduction of Sh7.5 billion compared to last year when they earned a dividend of Sh29.9 billion from the telco.

Safaricom’s upcoming payout is equivalent to a distribution of Sh1.40 per share, down from last year’s Sh1.87 per share (which included a special dividend of Sh1.25).

The telco reported a net profit of Sh74.7 billion in the year ended March, up 19.5 percent from Sh62.4 billion the year before.

LafargeHolcim will not get a dividend from its 58.6 percent stake in Bamburi Cement for the year ended December 2019. The multinational received Sh1 billion from the cement manufacturer for the prior year.

Bamburi paid a dividend of Sh5.1 per share for the year ended December 2018 and suspended payouts in the subsequent period after its net earnings fell 37.2 percent to Sh359 million on a higher tax charge.

The firm’s tax bill rose 7.6 times to Sh369 million after the expiry of tax incentives for new capital investments in its regional subsidiaries.“The absence of the investment deduction allowance benefit for […]

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