Listed insurer Sanlam Kenya has issued a profit warning to its investors, anticipating a larger net loss in the year ending this month due to higher finance costs and paper losses on government securities.
This brings to 13 the profit warnings issued this year by Nairobi Securities Exchange-listed firms including Kakuzi Plc and Express Kenya which cited a tough operating environment among other factors for their reduced earnings.
Others are Kenya Power, Unga Plc, Sameer Africa, Crown Paints, WPP Scangroup, Longhorn Publishers, Sasini, Car & General, Nation Media Group and Centum Investment Company.
“Based on the current unaudited financial results, the Board of Directors of the Company are of the view that the company’s projected earnings after tax for the year ending December 31, 2023 are at least 25 per cent lower than the earnings after tax reported for the year ended December 31, 2022,” said Sanlam in a notice.
“The projected decline in earnings ... is due to the prevailing high-interest rates leading to increased finance costs and unrealised fair value losses on our portfolio of government securities.”
Sanlam’s net loss narrowed to Sh54.07 million in the year ended December 2022 from Sh542.36 million a year earlier, helped by reduced expenses in the general or short-term insurance business.
The profit warning means that the company will post a net loss of at least Sh67.5 million in the current financial year. The projected loss will mark the insurer’s fourth straight year of losses, signaling a continuation of a dividend freeze.
Sanlam Kenya’s last dividend came in 2013 at Sh4.50 per share amounting to Sh432 million as net earnings hit Sh1.25 billion. The company warned its shareholders and the public to exercise caution when dealing in its shares.
Companies are required by law to issue profit warnings at least 24 hours before they publish full year results which show that their earnings have dropped by a quarter or more compared to the prior year.
The Capital Markets Authority (CMA), however, encourages listed firms to issue such notices as soon as their managers become aware of the likely drop in profits.
Such announcements are meant to give existing and prospective shareholders a guide to a company’s performance in advance of what would otherwise be shocking results.
