NAIROBI, KENYA, AUGUST 28 ― Sanlam Kenya (Plc) has issued a profit warning for its financial results ending December 31, 2018, noting it could fall 25 per cent lower than the Ksh53.01 million net profit posted last year.
The Nairobi Securities Exchange listed non-bank financial services firm has based its projected fall on earnings to the recent 100 per cent impairment of financial assets covering corporate bonds investments, placed in prior year periods in now distressed local enterprises.
The firm has also noted the general impact of slower economic growth and continued interest rates capping effects (in Kenya) within the period under review.
These, Sanlam says have adversely affected its non-bank financial services, investments and returns.
“Based on our un-audited half year financial results and factoring in figures and information currently at the board’s disposal, we wish to report that our projected net earnings for the period to 31st December 2018 will be potentially 25 per cent lower than the reported earnings for the year ended 31st December 2017,” the firm said in an announcement through the Nairobi Securities Exchange.
“Sanlam Kenya Plc hereby wishes to issue this profit warning notice and cautionary statement for the benefit of our esteemed investors and the general public,” chairman John Simba said.
The firm said management in consultation with the board will put together a turnaround strategy geared at advancing the group’s performance.
The turnaround strategy will be focused on pursuing key programmes geared at elevating the business back on a profitability path through an enhanced investment policy, leadership change and management re-organisation and adoption of contemporary information technology tools to optimise operational efficiency.
“The board remains optimistic that these initiatives among others will provide a good foundation to revitalize the business. Collectively, we remain committed to ensuring that the business is fine tuned to deliver value for all our stakeholders,” the firm said.
Sanlam Kenya, formerly pan Africa Holdings, posted a 24.9 per cent drop in its profit for the year ended December 31, 2017 where net profit was Ksh53.01 million, down from Ksh70.62 million the previous year.
The firm has issued a profit warning for last year which it later withdrew after a review of its liabilities and general performance.
The underwriter recorded a robust growth in its general insurance business which saw earnings rise to Ksh1.49 billion from Ksh647.9 million a year earlier.
Profit from that segment closed at Ksh68.7 million, a turnaround from Ksh36.7 million loss recorded the previous year.
Net earnings from life underwriting however dropped to 307.7 million from Ksh412.2 million, while total income from its investment unit dropped to Ksh113.4 million, from Ksh156.1 million in 2016.
Gross written premiums (Life) closed at ksh4.33 billion, a slight drop from Ksh4.39 billion a year earlier.
General insurance written premium closed at total Ksh2.15 billion up from Ksh1 billion a year earlier. General business underwriting profit was Ksh40 million, a rebound from Ksh38 million loss.
The firm reported a five per cent increase in total assets which closed at KSh29.8b compared to Ksh28.4 billion a year earlier.
Earlier this month, Sanlam named former Jubilee Insurance (Kenya) boss Patrick Tumbo as its new Group Chief Executive Officer, substantially filling the seat five months after the departure of former chief Mugo Kibati.
It is counting on Tumbo’s experience in the industry to grow its business.