Kenya Power announces expected drop in profits
Kenya Power has announced an expected drop in its net earnings for the financial year ended June 30, 2019.
In a public notice issued on Thursday, Kenya Power said its profits are projected to decline by more than 25 per cent of the net earnings reported for the same period last year.
“The Board of Directors of Kenya Power wishes to inform its shareholders, potential investors and the general public that the company’s net profit for the financial year ended June 30, 2019, are projected to decline by more than 25 per cent of the net earnings reported last year,” said Kenya Power Acting Managing Director Jared Othieno in the statement approved by the Capital Markets Authority (CMA).
According to the power distributor, the drop in profits is attributable to among others, an increase in non-fuel costs in line with the company’s long-term strategy of growing cheaper and cleaner renewable energy.
Even so, inefficiencies continue to haunt the monopoly in spite of growing operational revenues and electricity sales.
Kenya Power had similarly issued a profit warning last year before posting a 64 percent dip in earnings in the 2017 financial year to Ksh.1.9 billion in spite of growing revenues marginally by 4.2 percent to Ksh.125.8 billion.
Costs levelled on power purchases surged to Ksh.52.3 billion on the back of an extension to its network reach.
The firm which now has more than six million customers has had to rely on borrowed funds to navigate the muddy financial waters piling the pressure on the company’s bottom line.
At the same-time, the growing network has been a weak point to Kenya Power as the electricity distributor struggles to recoup its investment including extended credit to its clients.
In six months to December 2018, the firm additionally posted a reduced Ksh.2.5 billion profit as finance costs grew by 23.5 percent on the back of increased bad loans provisioning.
Kenya Power has however backed itself to swim through the rough waters in a newly launched energy loss reduction programme which will see the firm trim its commercial losses in transmission to less than 15 percent in quest to meet global operating benchmarks.