Nairobi Securities Exchange. Only nine publicly-traded companies announced they will report earnings decline of more than 25 percent this year, an improvement from 14 such adverse notices issued in 2018. FILE PHOTO | NMG Only nine publicly-traded companies announced they will report earnings decline of more than 25 percent this year, an improvement from 14 such adverse notices issued in 2018.
The nine firms trading on the Nairobi Securities Exchange and the over-the-counter (OTC) market include BOC Kenya, Kenya Airways, Standard Group, CIC Insurance Group, Williamson Tea Kenya and Eaagads.
Others are Kenya Power, Kapchorua Tea and NSE which operate the bourse and is self-listed.
Kenya Power was also present in the 2018 list of profit warning issuers in a group that included East African Portland Cement Company, UAP Holdings, Bamburi Cement, Crown Paints, HF Group, National Bank of Kenya, Britam Holdings and Deacons East Africa.
Others were Home Afrika, Sameer Africa, Carbacid Investment, Kenya Re and Sanlam Kenya.
Profit warnings are issued to warn existing and prospective investors of the potential for significant share price drops besides potentially lower dividend payouts.
Most companies whose earnings drop by the 25 percent threshold or more have either reduced payouts to shareholders or suspended cash distribution altogether.
A few others have, however, dipped into their retained earnings to maintain their dividend distributions. The earnings declines have been brought by a mix of factors including a generally tough business environment, increased competition for some of the companies and idiosyncratic issues such as overspending and mismanagement.
Kenya Power, for instance, has recorded major profit drops on the back of internal fraud and heavy spending on its electricity distribution infrastructure.
Agricultural firms have blamed their weaker performance on higher operating expenses and a glut that has hurt commodity prices in the international markets.
Sasini, for instance, sunk into a net loss of Sh337.7 million in the year ended September on the back of lower sales, a move that saw the company suspend dividends.The company had made a net profit of Sh293.5 million the year before.Sasini, which had paid an interim dividend of Sh0.5 on July 16, said it will break its custom of making a second distribution of a similar size to shareholders.The company’s sales declined 20 percent to Sh2.7 billion in the review period compared to Sh3.5 billion a year earlier.