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Kenya Power pays first interim dividend in nine years
Kenya Power Managing Director Joseph Siror during the release of the company's half year financial results at Stima Plaza in Nairobi on January 31, 2025.
Kenya Power has declared the first interim dividend in nine years, a further boost to shareholders after the firm’s half-year profit jumped over 30 times to Sh9.97 billion.
The electricity distributor on Thursday declared a dividend of Sh0.20 per share as net profits for the six months to December rose from Sh319 million posted in a similar period a year earlier.
The profit surge and resumption of dividend payments sparked a rally in Kenya Power shares at the Nairobi bourse, gaining 247 percent in six months to close at Sh6.78 per share—making it the second-best performer at the bourse in the period.
Kenya Power last paid an interim dividend in 2015 at a rate of Sh0.20 per ordinary share but froze the payments in subsequent years amid heavy losses.
A substantial part of Kenya Power's profit is, however, attributable to a reduced debt burden on account of a stronger shilling.
The firm reckoned that the increased supply of electricity boosted the profits and eased the impact of a cut in tariff to homes on July 1 by Sh1.50 per kilowatt hour (kWh).
Units of electricity sold rose five percent to 5,506 gigawatt hours (GWh), but its sales dropped 5.4 percent to Sh107.42 billion due to the tariff cut.
“This growth in profitability is attributed to lower cost of sales and reduced finance costs owing to the stability of the Kenya shilling against major foreign currencies during the period under review, and an increase in electricity sales by five percent from 5,225 GWh to 5,506 GWh,” said the firm.
“The increase in electricity unit sales was driven by higher consumption as a result of improved network reliability, connection on new customers and improved outage resolution timelines supported by availability of critical materials including meters and transformers.”
A strong shilling and increased electricity sales have recently improved Kenya Power’s fortunes as the firm reaped big from increased connections.
The shilling rallied to exchange at 129.2 units to the dollar at the close of the year in December compared to 156.4 units to the greenback a year earlier, helping to cut debt and power purchase costs.
Kenya Power loans are denominated in foreign currency mainly the dollar and euro, highlighting why the company was one of the biggest gainers in the wake of the shilling’s rally from the start of this year.
The strong shilling combined with repayments of loans helped cut its debt repayment expenses by Sh13 billion in the period under review.
About 90 percent of Kenya Power’s loans are in foreign currency.
‘’During the period, the company commenced repayment of the GOK (government) on-lent loans that had remained on repayment moratorium since March 2020,” said the firm.
Kenya Power had been leaning on the moratorium window to attain sustainability in annual debt service, improving both its net cash position and working capital alongside its financial ratios.
It now plans to retire all hard currency commercial debt in its books by June 2026.
