Flame Tree reports 73pc fall in net profit to Sh39.75m

What you need to know:

It's net profit fell by 72.58 per cent to Sh39.75 million from Sh144.98 million a year earlier.
The firm had warned investors last December that profit would fall by at least 25 per cent year-on-year.
The firm has not recommended a dividend payout.

Flame Tree Group profit for 12 months ended last December dropped by nearly three quarters, the Nairobi bourse listed company reported on Friday.

It's net profit fell by 72.58 per cent to Sh39.75 million from Sh144.98 million a year earlier, the mid-sized manufacturer, which also distributes plastic water tanks, mobile toilets, cosmetics and snacks said in a statement.

Flame Tree attributed the drop to an increment in global prices of polymer – a key material in making of plastics – as well as a rise in fuel and input food prices because of reduced production following a biting drought in 2017.

READ: Job cut fears amid growing list of firms issuing profit warnings

Profit warning

The firm had warned investors last December that profit would fall by at least 25 per cent year-on-year.

“The company made significant provisions against receivables from supermarkets in Kenya that have been extremely slow to pay,” the firm said.

“As a result of these factors, profit after tax declined to Sh39.8 million, representing earnings per share of Sh0.25.”

READ: Flame Tree buys playground tools maker PolyPlay

Rising expenses

Earnings from sales dipped by 4.70 per cent to Sh2.425 billion, while total expenses rose 6.7 per cent to Sh716.89 million.

“Year 2017 was a challenging year due to the uncertainty brought about by the prolonged election period, subdued trading activities and drought which affected our operations,” chief executive Heril Bangera said in the statement.

“Effects of the interest rate capping continued to be felt across the market, with constrained credit from the Banks affecting the overall business environment.”

The firm has not recommended a dividend payout.