Mabati Rolling Mills workers at a plant. PHOTO | FILE
What you need to know:
MRM made a net profit of Sh755.7 million in the review period compared to Sh657 million the year before.
Building materials manufacturer Mabati Rolling Mills (MRM) posted a 15 per cent net profit jump in the year ended December boosted by increased sales.
The company, whose Sh2 billion bonds mature in October, made a net profit of Sh755.7 million in the review period compared to Sh657 million the year before.
MRM made an operating profit of Sh1.9 billion in the period, representing a 2.2 times coverage of its Sh860.3 million finance costs.
Its borrowings more than doubled to Sh6 billion from Sh2.9 billion. MRM in 2008 raised a total of Sh2 billion through two eight-year corporate bonds.
One bond, with a fixed coupon of 13 per cent, raised Sh1.3 billion. The other, whose coupon floats at an extra 1.75 per cent on the prevailing T-Bill rates, raised Sh621.5 million.
The increase in borrowings saw its finance costs rise 96.1 per cent to Sh860.3 million compared to Sh438.5 million a year earlier.
MRM’s sales of materials, including galvanized aluminium-zinc sheets, rose 4.9 per cent to Sh17.2 billion.
Its cost of goods sold (Cogs) rose 1.6 per cent to Sh13.7 billion, with other expenses rising at faster rates.
MRM’s distribution expenses jumped 34.4 per cent to Sh530 million while administrative expenses increased 12.5 per cent to Sh1 billion.
The company’s comprehensive income more than doubled to Sh1 billion from Sh489.5 million. This came after a net revaluation surplus of Sh297.7 million added to the net profit of Sh755.7 million in the period.
The company’s bonds last traded at their face value, according to trading statistics from the Nairobi Securities Exchange.
Investors in MRM bonds will have more than doubled their money when the debt is redeemed in October.
Faith in corporate bonds, which have paid a little premium on risk-free government debt, has however been shaken in the wake of the collapse of Imperial Bank and Chase Bank which raised Sh2 billion and Sh4.8 billion respectively.
Investors in the firms are facing uncertainty over the payment of interest and return of their capital.
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