Carbacid profit up 28pc as rival BOC targets its turf

The Carbacid factory based in Industrial Area, Nairobi. Photo/FILE
The Carbacid factory based in Industrial Area, Nairobi. Photo/FILE 

Carbacid Investments has announced a 28.8 per cent growth in full year profit as rival BOC Kenya plans to take on the industrial gas firm with its own carbon dioxide (CO2) manufacturing plant.

The company said its net profit stood at Sh389 million in the year to July compared to Sh302 million, helped by rising demand for carbon dioxide, which accounts for about 90 per cent of its sales, that lifted revenues 60 per cent to Sh921 million. It also produces dry ice.
The company declared a final dividend of three shillings per share, taking the total payout for the year to six shillings, up from five shillings the previous year.

Carbacid has benefited from increased demand for CO2 from food and beverage firms such as East African Breweries, Coca-Cola, and flavoured juice makers who use the commodity as a preservative for food and beverages.

Analysts expect the carbon dioxide market to grow as these companies announce mega expansion plans, a trend that has caught the eye of rival BOC Kenya that plans to use its dormant licence for mining and manufacture of carbon dioxide.

“Demand for carbon dioxide appears to have been surprisingly strong over the year and it is likely that the company got a new major client, existing clients increased capacity or the company expanded into new regional markets-no explanation was provided,” said analysts at Standard Investment Bank in a research brief after the profit announcement.

“We think Carbacid has room to develop new applications for its product, particularly in the growing oil sector. The market for its products, particularly on its long term supply contracts with Coca- Cola, continues to be a key earnings driver for the gas maker.”

But BOC Kenya is renewing its interest in the carbon dioxide market after its botched acquisition of Carbacid five years ago.

“We are in discussions at the board level on how go into carbon dioxide business using our licence,” Maria Msiska, the managing director of BOC told the Business Daily in an earlier interview.

This will be the latest attempt by BOC to gain a stake in the carbon market after it failed to acquire Carbacid, the main CO2 producer, in 2005 after the Capital Markets Authority (CMA) refused to approve the deal.

A review of BOC’s five year performance indicates that the gas maker has remained stagnant and trailed its peer Carbacid.