Kenol Kobil moves into non-oil products to grow its earnings

Kenol Kobil is deepening its reach into the non-oil products market to grow revenues and reduce over-reliance on fuel revenues.

The oil marketer has invested in real estate, setting up LPG plants, importation and sale of oil to regional marketing firms.

Managing director Jacob Segman said the firm had bought 17,000 acres of land on which it plans to build. He did not state where the land is.

The real estate investment is targeted at residential houses and shopping centres.

“We seek to grow our non-oil income from the current 10 per cent to 20 per cent in about six years,” said Mr Segman.

The company has set up a new LPG plant in Dar es Salaam with a capacity of 21,000 cubic meters.

The firm said it intended to grow her revenues in LPG from the current 16 per cent to 20 per cent in the next five years.

The LPG facility, which is worth $7 billion, will make Kenol Kobil the leading LPG distributor in Tanzania .

The firm has already taken over the LPG market in Rwanda.

In a move to strengthen her grip on Mozambique, Kenol Kobol has signed a contract with the government to set up a storage facility with a capacity of 21,000 cubic metres.

Mr Segman said the company’s growth in the oil sector in Kenya was hampered by poor infrastructure and government intervention.

The firm said it planned to start marketing paraffin in Tanzania.

“Only one firm markets paraffin. This opens a huge opportunity for us to grow our revenue.”

Mr Segman said they were seeking to start supplying oil to a market of more than 30 marketing firms in Zimbabwe.

In January, the firm bought a fuel terminal, an office block, and three gas stations from Phoenix Uganda Petroleum Ltd.

Storage facility

The firm’s management said they had acquired 14 small players in Burundi’s oil market and had invested in a 4,000 cubic metre LPG storage facility.

Kenol Kobil recorded 37 per cent growth in its net earnings for the year ended December last year.

The firm’s net profit stood at Sh1.7 billion compared to Sh1.2 billion the previous year as sales grew by Sh5.1bn to Sh101.7bn.

Mr Segman said the company’s share price was under valued.

But market analysts at Genghis Capital said Kenol Kobil’s share price is at its right position of Sh9.50 per share.