Chevron buyout boosts Total Kenya’s profits

Total Kenya announced an eightfold increase in its half-year net profits helped by higher fuel prices and proceeds from Chevron Kenya, which the oil firm bought in June 2009.

The oil marketer’s net profit stood at Sh302 million in the six months to June 2010, compared to Sh36 million in the same period a year earlier.

Its revenues grew by 250 per cent to Sh38.9 billion in the period under review with the Chevron outlets estimated to have generated more than 40 per cent of the sales.

“This good performance arises from synergies resulting from the merger,” said Total Kenya managing director Felix Majekodunmi.

The company said that this year’s rising oil prices contributed significantly to the realisation of increased profit margins.

The period saw pump prices average between Sh86.20 per litre and Sh92.20 per litre, which is higher compared to the Sh84.50 per litre and Sh78.90 per litre range during the same period last.

Oil prices rose this year on renewed demand even as global economic growth took over from months of subdued demand occasioned by the Eurozone debt crisis in the half of 2009.

The company’s operating expenses rose from Sh657 million to Sh1.2 billion, while depreciation and amortisation expenses rose by Sh285 million resulting from the cost of running acquired assets from the merger.

Higher sales volumes arising from increased market presence due to the merger between the company and Chevron saw the firm’s turnover rise from Sh15 billion last year to Sh38 billion.

The merger has boosted the company’s competitiveness in terms of increasing her market share.

Rival Kenol Kobil delivered Sh1.17 billion in after-tax half year profits, rising from Sh431 million loss in the same period last year, buoyed by relatively stable oil prices.

Kenol Kobil’s firm grip on the local market has been loosened by a re-energised Total Kenya, helped by the acquisition of Chevron assets.

Data from industry lobby Petroleum Institute of East Africa (PIEA) places Kenol’s market share at 18.7 per cent, down from 23.6 per cent last year.

Total’s market share stands 31 per cent up from 19 per cent last year.

Smaller players like OiLibya, National Oil, Engen, and Gapco among others hold the remaining share of the market.