KenGen ups dividend payout as profit jumps threefold to Sh11.5bn

What you need to know:

KenGen's net profit increased to Sh11.5 billion, up from Sh2.8 billion a year earlier — marking a 307.5 per cent jump and hitting one of the highest earnings in corporate Kenya this year.
This helped the utility to declare a dividend of Sh0.65 per share, up from Sh0.40.
On Monday the stock closed at Sh8.30 a share, up from Friday’s close of Sh8.20.

Kenya Electricity Generating Company (KenGen) has raised its dividend payout by 62.5 per cent after recording a threefold jump in net profit in the year ended June, powered by increased sales and a tax credit.

The Nairobi Securities Exchange (NSE)-listed firm’s net profit increased to Sh11.5 billion, up from Sh2.8 billion a year earlier — marking a 307.5 per cent jump and hitting one of the highest earnings in corporate Kenya this year.

Revenue from electricity sales grew 46.9 per cent to Sh25.6 billion in the review period.

A tax credit of Sh2.8 billion also boosted KenGen’s performance.

This helped the utility to declare a dividend of Sh0.65 per share, up from Sh0.40, offering a boost to shareholders who have seen the shares shed more than a fifth of their value at the Nairobi bourse over the past six months.

“The board of directors is recommending for approval by shareholders a final dividend of 65 cents per ordinary share of Sh2.50 par value,” managing director Albert Mugo said in a statement.

The company, which sells its units to Kenya Power, said the year saw increased power generation following the commissioning of new geothermal plants between July and December last year.

“Profit after tax increased…propelled by capacity growth, improved performance and tax credit from capital allowances enjoyed by the company following the commissioning of 280-megawatt geothermal plants, wellheads in Olkaria and Ngong wind,” he said.

The firm said the injection helped it to displace expensive diesel plants and reduce reliance on weather-prone hydroelectric plants. This saw the company’s installed capacity grow to 1,611 megawatts from 1,337 megawatts last year.

The drop in the utility’s share had been attributed to investors’ fears of dilution from the delayed rights issue to raise Sh15 billion.

On Monday the stock closed at Sh8.30 a share, up from Friday’s close of Sh8.20. In March the stock had risen to a high of Sh12.45, from a January opening of Sh10.15.

Operating expenses in the year rose by Sh1.3 billion to Sh8.4 billion due to “costs associated with operating and maintaining the newly completed plants.”

Depreciation and amortisation expenses increased by Sh1.7 billion to sh6.4 billion.