A Barclays Bank branch in London. Barclays Plc is set to earn less dividends from its Kenyan subsidiary. AFP
What you need to know:
BAT, Lafarge, Sanlam, Helios among global giants to receive more this year.
Diageo will repatriate less dividends as its local affiliate, East Africa Breweries Limited (EABL), reported a drop in first half profits.
Barclays Plc will earn less after its Kenyan unit cut its dividend to Sh1 from last year’s Sh1.50 despite an increase in net profit.
Multinationals with majority stakes in firms listed on the Nairobi Securities Exchange (NSE) have emerged beneficiaries of the rise in dividend payouts in corporate Kenya.
This underlines the growing importance of emerging economies in cushioning earnings of global conglomerates.
The global giants including BAT, Lafarge, Sanlam and private equity fund Helios will be sending more money to parent companies this year compared to last year.
But Diageo will repatriate less dividends as its local affiliate, East Africa Breweries Limited (EABL), reported a drop in first half profits—a case that also awaits Barclays Plc.
Unlike in 2011, the listed companies that are majority owned by the multinationals recorded slower growths in 2012, but this did not stop them from raising dividends.
“Companies with multinational anchor shareholders tend to pay higher dividends relative to local firms. And this was apparent even in firms whose performance dipped,” said an analyst at Standard Investment Bank.
French conglomerate Lafarge— which owns 58.6 per cent of Bamburi Cement —is one of the firms that will receive a fat cheque from its Kenyan subsidiary that reported a 16.5 per cent drop in profits to Sh4.88 million.
Lafarge’s take home will increase to Sh1.8 billion from Sh1.7 billion last year and Sh1.48 billion in 2011.
BAT, a top performing industrial firm, increased its dividend payment to Sh32.50 from Sh30.50 after it announced a nine per cent increase in net profits to Sh3.27 billion— earning its parent company Sh1.95 billion in dividends.
BAT share has risen 75.4 per cent over the past year to Sh539.
Kenya’s financial services firms, which collectively grew their profit 23.5 per cent to Sh98.8 billion in 11 months to November, are expected to top the list of heavy dividend payers, enabling shareholders grow their take home by double digits this year compared to 2011.
One such beneficiary is Equity Bank. The bank raised its dividend payout to Sh1.25 per share from Sh1.00 in 2011, earning its top shareholder, Helios Investors, Sh1.13 billion for its 24.45 per cent stake.
But Barclays Plc will earn less after its Kenyan unit cut its dividend to Sh1 from last year’s Sh1.50 despite an increase in net profit by 7.4 per cent to Sh8.7 billion. This means that the UK lender will receive Sh3.72 billion compared to Sh5.58 billion in 2012.
EABL, which is majority owned by Diageo, also cut its interim dividend payment for the first time in many years to Sh1.50 from Sh2.50 a share, after half year profits dropped 18 per cent to Sh3.7 billion on high financing costs. Diageo will receive Sh5.92 billion from the interim payout.
Diageo like other multinational brewers has intensified its activities in emerging economies such as Kenya to compensate for falling sales at home.
Corporate Kenya was characterised by currency, inflation and interest rate volatility. This saw at least 10 listed companies issue profit warnings, an indication that their performance for last year would be at least 25 per cent lower than 2011 results.
