The company continues to fight illegal refilling of its gas cylinders
Industrial gas manufacturer BOC Kenya has posted a 65.7 per cent growth in net profit for the year ended December 31, despite tax-related loss provisions made in the books of a subsidiary company.
The Nairobi Securities Exchange (NSE) listed company’s profit closed at Ksh65.3 million, up from Ksh39.4 million in 2017, as the firm survived a tough business environment in Kenya, where genuine players in the gas industry continue lose out to illegal gas re-fillers and rogue players.
“The increased profitability was result of cost management, sustainable efficiencies and savings initiatives that the company has instituted over a long period and the maintaining of revenues despite the challenges in the industrial sector,” the company says in its financial results.
A subsidiary of multinational chemical company- Linde Group, BOC has also made gains from lower operating costs and foreign exchange gains.
The profit jump comes against a slow revenue growth which remained flat at Ksh967 million similar to the previous year (2017).
The board notes that demand from the medical gases sector-where quality and safety standards are better adhered to-increased during the year, driven by customer confidence, reliance on its quality products and engineering solutions, and expansion of the sector.
”However, the revenue gains from the medical sector have been eroded by a challenging operating environment in the industrial sector, not least from the illegal filling of the company’s gas cylinders,” the management said.
Total assets in 2018 dropped marginally (3.6 per cent) to Ksh2.15 billion from Ksh2.23 billion it had a year earlier.
The health services sector in Kenya has been expanding over the last several years and the company says it continues to partner with the various public and privately-owned health-care facilities to ensure the availability to patients of high-quality medical gases.
“We especially look forward to continuing collaboration with the county governments in their ongoing efforts to ensure access to medical oxygen at the county level hospitals,” the company notes.
The industrial gases and welding products markets however continues to face significant pressures from low-cost imported products and more pronounced illegal refilling to the company’s gas cylinders. The BOC management says it has taken certain steps and the company is hopeful that, working with the appropriately mandated enforcement agencies, the illegal filling of cylinders will begin to abate in the coming months.
“While ensuring that local standards as well as the Linde’s Group’s global production and safety standards are adhered to, the board and management will continue to focus on efficiency in production so as to deliver products and services to customers competitively and timeously,” it said.
The board of directors has recommend the payment of a final dividend of Ksh2.85 per share (2017 Ksh3.00) bringing the total dividend for the year 2018 to Ksh5.20, similar to 2017.