NAIROBI, KENYA, MAR 14 — KenolKobil has reported an after tax profit of Ksh2.46 billion for the year ended December 31, 2017, an almost flat growth compared to Ksh2.41 billion recorded in 2016.
The Nairobi Securities Exchange listed oil marketer has attributed the minimal 2 per cent growth in net profit to “settlement of old matters and disputes” that included the Kenya Petroleum Refinery Limited receivables impairment, former CEO and other legal settlements with business partners.
The company paid off Ksh570.2 million as part of an impairment provision related to the defunct KPRL plant in Mombasa. This is part of the losses accrued from the refinery which closed operations in 2013. KPRL owed the oil marketer a whooping Ksh1.8 billion.
Impairment normally occurs when there is a sudden and large decline in the fair value of an asset below its carrying amount.
Last year, the firm also settled a long-standing compensation dispute with its former CEO Jacob Segman, who had claimed more than Sh300 million. The settles was done under the Employee Share Ownership Plan (ESOP).
“Without the extraordinary expenses, net profit would have been Ksh3.4 billion,” group managing director David Ohana said in a statement on Wednesday adding “We expect no further provisions or expenses related to these matters.”
The group’s gross profit grew to Ksh7.9 billion last year, from Ksh7.4 billion the previous year.
The results were achieved despite a slowdown in the economy arising from the prolonged electioneering period in Kenya, drought and unstable exchange rates in most of the markets the group operates in.
Its net sales closed at Ksh158.7 billion, up from Ksh103.3 billion in 2016, buoyed by volume growth as well as increased international oil prices.
“Most of the cash generated by the business was employed in reducing debt, which combined with bank facilities restructuring contributed significantly in reducing of financing debt,” the firm reported.
The firm’s forex loss stood at Ksh47 million against Ksh2.5 million in 2016.
“The rising oil prices in the international market called for stringent inventory management strategies which the board successfully implemented,” Ohana said, noting that the board is also satisfied with strategies put in place to manage forex exposure.
The firm, which is one of the leading oil marketers in Kenya by market share, grew its shareholder’s funds to Ksh11.2 billion as at December 31, from Kh9.9 billion the previous year.
“The board is positive that given the good performance, the solid company fundamentals and various strategies being implemented on cost management reduction, network expansion and venturing into unexploited lines of business among others, 2018 is expected to be a promising year,” Ohana said.
“While volatility in international oil prices is likely to remain deep into the year, the board remains confident that with the right strategies already put in place, this should not adversely affect the business,” he added.
The board has recommended a dividend of Ksh0.30 per share.