TotalEnergies Marketing Kenya has issued a profit warning for the year ending this month, citing higher finance costs as interest rates rose.
The announcement means the oil marketer’s earnings for the period will fall significantly compared to the Sh3.02 billion net profit it recorded last year.
“The board of directors … wishes to inform its shareholders and the investing public that the projected 2024 full year profit after tax is expected to decrease by more than 25 percent compared to the profit after tax reported in the previous year ended December 2023,” the company said in a notice.
“The projected decline in the company’s profit after tax was notably affected by the high interest rates, which resulted in increased finance costs, compounded by a challenging and volatile business environment.”
TotalEnergies added that interest rates have started to fall, a trend that is likely to improve profitability in the new year.
The company had posted higher earnings in the half year ended June 2024, with the profit warning indicating that the profit momentum had weakened in the second half of the current financial year.
The oil marketer’s finance costs had already surged to Sh1.5 billion in the first half of the year compared to Sh396.4 million a year earlier.
The company had settled its bank overdrafts worth Sh5.5 billion as of June 2024, but it was not clear whether it had taken on new liabilities.
TotalEnergies said the profit warning is based on a forecast of the financial results for the current financial year.
Companies listed on the Nairobi Securities Exchange are required to inform shareholders if they anticipate that their full year net profit would drop by at least 25 percent.
The rule is meant to prepare current and prospective investors for what would otherwise be shocking results.
