Umeme dividend up 18pc as earnings increaseTuesday March 28 2023
Uganda’s largest energy distributor Umeme Limited has raised its dividend for the year ended December by 18.6 percent to Sh2.23 per share at current exchange rates after growing its net profit by six percent to Sh5.162 billion.
The company, which is cross-listed on the Nairobi Securities Exchange, had paid a dividend equivalent to Sh1.88 the year before.
The new payout, which cements its position as the firm with the highest dividend yield on the NSE, is scheduled to be paid on or before July 20 to shareholders in its books as of June 27.
The growth in profitability for the electricity distributor is anchored largely on muted costs growth which served to offset a marginal growth in operating profit.
The firm’s operating costs were only up by three percent at Sh8.6 billion largely from inflationary pressures as the electricity distributor found operational efficiencies from the adoption of technology.
“The general restructuring, reconfiguration of our operating areas into zones and insourcing of network operation activities, anchored on our technology platforms improved the operating efficiencies,” the company stated on Monday.
Growth in revenues for the distributor was slowed down in part by an increase in the cost of sales which rose by 0.9 percent from the increase of the electricity generation levy on bulk purchases in Uganda to 0.7 percent from 0.3 percent in the second half of 2022.
The management of Umeme indicated it remains committed to meeting its mandate through the end of its concession on electricity distribution with the Ugandan government which comes to a close in March 2025.
“We hereby extend our re-assurance to the government, stakeholders and our shareholders of our commitment to a smooth translation process back to government operation of the distribution system, while continuing to meet our contractual obligations, and expectations of our shareholders,” the company added.
Across 2022, Umeme’s customer grid connections increased by 7.4 percent with an additional 121,132 connections increasing its customer base to 1.75 million.
The assets and operations of Umeme Limited are set to be handed back to the government at the end of the concession as part of reforms in Uganda that include consolidation of varying electricity segments into one national utility with the minimal involvement of the private sector.
At the end of the 20-year concession, the Ugandan government is expected to compensate private shareholders in the company who include the International Finance Corporation.