Kenya Power issues profit warning, blames economy

Kenya Power's net earnings for the year ended June 2018 is expected to drop by over 25 per cent as compared to the previous year.

This means the Nairobi Securities Exchange-listed utility firm now expects to post a net profit of at least Sh5.45 billion, compared to Sh7.27 billion posted in June last year.

A profit warning issued by the company cites challenges including a tough economic environment and poor rainfall as the reason for the decline in earnings.

“Revenue growth in the year was constrained by the depressed economic environment, poor hydrological conditions in 2017 and the protracted electioneering period. This slow business environment led to a significant decline in the company’s financial performance,” the statement signed by acting managing director Jared Othieno states.

In the year ended June 2017, the power distributer had a total revenue of Sh120.7 billion mainly because of a near doubling of fuel cost charged to consumers from Sh12.5 billion to Sh22 billion.

However, its transmission and distribution costs grew 16.6 per cent to Sh33.4 billion, resulting in a marginal one per cent rise in its profit after tax.

The State-owned power producer says it is now in the process of making changes in its strategy to arrest declining performance that includes diversification of revenue streams and a focus on improving its customers' experience.

In February, the company announced that its net profit for the six months ended December 2017 had dropped by 30.3 per cent to Sh2.93 billion.

Earlier this year, the Energy Regulatory Commission (ERC) revised electricity tariffs which raised costs for Kenya's middle class consumers.

President Uhuru Kenyatta last week asked the regulator to revise tariffs for the benefit of Small and Medium Enterprises (SMEs).