Oil marketer KenolKobil has sold its subsidiaries in Tanzania and the Democratic Republic of Congo, marking an exit from the two countries.
The company said in a statement Wednesday it has disposed of all its interests in Kobil Tanzania, which had 17 fuel stations, and Congo SPRL whose only asset was a fuel depot in Lubumbashi.
“We faced challenges in those markets. We sold at a good price and used the money to pay debt,” chief executive David Ohana said in an interview but declined to reveal the value of the transactions.
“We retain our operations in the other markets. The exit (in Tanzania and Congo) will strengthen the group.”
The company had invested Sh129.5 million in Kobil Tanzania as of December 2014. The investment in or the carrying value of the DRC subsidiary was not immediately available.
DRC has been rocked by civil war and political instability, with the country hit by a general strike just last week as protesters demand that President Joseph Kabila quit office when his mandate ends in December.
Kenol acquired the Lubumbashi fuel depot in 2011, positioning itself to supply the region where demand for petroleum products is driven by mining activities.
The Nairobi Securities Exchange-listed firm had, at the time, said the move was part of its push to grow its Pan African downstream oil business.
Mr Ohana said the company also faced unspecified challenges in Tanzania, forcing it to exit that market.
Selling the subsidiaries now leaves Kenol with a presence in Kenya, Uganda, Zambia, Rwanda, Ethiopia, Burundi and Mozambique where it fully owns the operating subsidiaries.
The sell-offs are in line with a change in the company’s strategy from aggressive regional and market share expansion to a focus on profitable countries and market segments.
The strategy shift has seen the company sell several assets, cut its borrowing and scale down its activities in fuel trading and at the open tender system where a player undertakes to import petroleum products on behalf of the industry.
Kenol reported a 73 per cent jump in net profit for the half-year ended June, helped by cost-cutting measures that compensated for lower sales.
The firm made a net profit of Sh918.4 million in the period compared to Sh531.1 million a year earlier. Its revenue fell 19.2 per cent to Sh34.8 billion, dipping Sh8.3 billion in absolute terms.
The cost of goods sold, however, dropped by an even larger 21.4 per cent to Sh31.9 billion, boosting the gross profit from savings of Sh8.6 billion.