BOC Kenya retains dividend despite profit drop

According to Mr Nyanjom, some of heavy consumers who produce the gasses on their own may be considered direct competitors if they start selling to end users.

Indirect competitors

In Mr Nyanjoma’s opinion, such institutions are indirect competitors to BOC since they are major producers and consumers of the gas products.

Examples of institutions that own oxygen production units are Steel Makers in Mombasa, Prime Steel, MP Shah and Nairobi Hospital.

Others are the Central Artificial Insemination Station which has installed a nitrogen plant.

BOC may find the going tough as it seeks to wrest a stake off Carbacid’s 95 per cent market share in the carbon dioxide market.

This is not the first time the firm will be attempting to venture into the carbon dioxide business.

After an earlier unsuccessful attempt to manufacture and sell carbon dioxide BOC saw the strategic importance of a stake in Carbacid.

In carbon dioxide, business that’s primarily dependent on strong ties and allegiances, BOC found that clinching contracts from both East Africa Breweries Ltd and Coca Cola which are among the largest buyers of the gas was a tall order.

It is while chairman of East Africa Breweries Ltd that former majority shareholder in Carbacid, Kenneth Matiba, acquired a 22 per cent stake in the plant cementing the ties between the two firms.

Carbacid has built a strong customer loyalty which includes soft drinks companies in Kenya, Uganda, Rwanda and Tanzania and a number of brewing entities in the East African region.

Even after a revenue increase of four per cent in the first half of the year to stand at Sh641 million, a rise in the cost of raw materials led to a 20 per cent fall in half year profits to Sh108 million.

Since its return to the stock exchange in November last year, BOC’s share price has fallen by 3.1 per cent to stand at the Sh155 at the close of trading last Friday.