KENYA'S KEN GEN: CAN SHAREHOLDERS SMILE IN 2019?

Can shareholders on Kenya Electricity Generating Company Plc otherwise known as Ken Gen afford to smile when the current financial year ends in June 2019?

May be, says figures for the half year to December 2018 released this week but at best don't bet on a very broad smile.

From the figures available, the smile on shareholders faces will depend on continued decline in steam costs and finance charges, and hopefully what the new generating plant to be brought on stream in July brings to the table.

Meanwhile, by half year, total income was down 1.69% to Ksh 23,287m from Ksh 23,689m as 68.8% leap in Other income helped reduce impact of 0.62% decline in electricity sales revenue to Ksh 22,185m and 34.3% dive in gains from forex etc to Ksh 649m from Ksh 988m.

Also, it was not helpful that in spite of the revenue drop, operating expenses rose by 7.14% to Ksh 4648m from Ksh 4980m and finance income dropped by 3.59% to Ksh 242m from Ksh 251m.

What saved the day was 17.7% decline in finance costs from Ksh 1628m to Ksh 1340m and 7.03% drop in steam costs from Ksh 1793m to Ksh 1667m.

Add to them the 4.54% decline in reimbursable cost of fuel and water to Ksh 4145m from 4342m, it becomes clear how Ken Gen ended only 0.97% drop in profit before tax to Ksh 6022m from Ksh 6081m.

Of course because this decline rate was lower than that recorded in total income, Ken Gen's profit margin ended the half year at 25.9%, that is higher than 25.7% at the same time in 2017.

Continue like that till the end, this could at least avoid a frown by shareholders but much more will need to be done or achieved from bringing on the new 165.4 MW plant in July, to really guarantee broad smiles, come year end.

KEN GEN: Ksh m Half year.
                      Dec 2018.       Dec 2017
Total income 23287.            23687
Core revenue 22185.            22323
Reimbursable. 4145.              4342
Other income     211.                125
Other gains net  649.                988
Operating cost 4980.             4648
Steam costs.    1667.             1793
Finance income 242.                251
Finance costs   1340.             1628
Profit b4 tax.     6022.             6081
Profit margin %  25.9.               25.7

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