Lower tax bill lifts Carbacid profit to Sh178 million

Carbacid Investments #ticker:CARB saw its net profit rise 69.6 percent in the half year ended January as the firm benefited from a lower tax bill.

The company, which produces carbon dioxide besides managing a portfolio of investments, posted net earnings of Sh178.6 million in the review period.

This was up from the net profit of Sh105.3 million made a year earlier. Carbacid benefited from higher sales and investment income but lower taxes paid in the review period made the biggest contribution to the earnings growth.

The Nairobi Securities Exchange-listed firm paid taxes of Sh53.8 million on its pre-tax earnings of Sh232.5 million, resulting in an effective tax rate of 23.1 percent.

In the prior year, its taxes stood at Sh48.5 million against pre-tax earnings of Sh153.8 million in what amounted to an effective tax bill of 31.5 percent.

Some of Carbacid’s income is not subject to tax while others such as dividends received from shares on listed firms is taxed at a lower rate of five percent.

This has seen the company’s effective tax rate fluctuate from the normal 30 percent rate depending on the performance and transactions in its diverse portfolio which includes real estate investments.

Carbacid’s sales of carbon dioxide jumped 15.7 percent to Sh352.9 million, marking a recovery in the business that had suffered from increased competition.

The company previously said it had lost significant market share to regional alcohol manufacturers who harness carbon dioxide as a byproduct of their production process.

Carbacid’s investment also rose 16.2 percent to Sh92.7 million, helping to boost the bottom-line. The company also benefited from the recent small rally at the NSE, a move that transformed its paper losses of Sh48 million into a gain of Sh3.1 million in the review period.