A BOC worker cleans cylinders at the Industrial Area plant, Nairobi. PHOTO | FILE
What you need to know:
BOC said its turnover dropped “due to cheap imports of oxygen and nitrogen, which also constrained the company’s ability to recover cost increases through pricing.”
Industrial gases producer BOC reported a 24 per cent decline in net profit for the half-year ended June, driven by lower sales as the firm faced increased competition from imported products.
Its net profit in the period stood at Sh65.1 million compared to Sh85.6 million a year earlier.
BOC maintained an interim dividend declaration of Sh2.2 per share despite the profit dip. The company’s revenues tumbled 17.5 per cent to Sh556.5 million, resulting in the reduced profitability.
BOC said its turnover dropped “due to cheap imports of oxygen and nitrogen, which also constrained the company’s ability to recover cost increases through pricing.” The company said it had to reduce its prices to protect its market share in the wake of the increased competition.
Its profitability was also hurt by foreign exchange losses, higher depreciation and provisioning for bad debts.
Its forex losses more than doubled to Sh10.5 million, reflecting the impact of depreciation of regional currencies including the Kenya, Uganda, and Tanzania shillings. BOC joins other publicly traded firms including Car & General, ARM Cement, and Sameer Africa whose profitability has been hit by the weakening of the currencies.
Besides forex losses, the companies have grappled with higher costs that they have found difficult to pass through to consumers.
Cutting costs
BOC says it expects to perform relatively better in the second half of the year partly by cutting costs and increased marketing.
“The board expects that the enhanced working capital management and sales and marketing activities currently underway and the easing of electricity costs will result in markedly improved financial performance in the second half of the year,” BOC said in a statement.
“The board of directors has taken measures to safeguard shareholder value by ensuring the company operations reflect a high level of efficiency and productivity,” the firm added.
Agricultural firm Limuru Tea yesterday also announced a 51.8 per cent profit drop to Sh3.6 million in the same period owing to a decline in revenues.
The company’s sales fell 11.6 per cent to Sh42.3 million, an outcome it blamed on dry weather that affected its tea production.
It processed tea dropped 15 per cent to 321 tonnes, with the company having produced 1,379 tonnes of green leaf in the period.
