Home ECONOMY 17 Companies Issued Profit Warnings in 2019 Alone

17 Companies Issued Profit Warnings in 2019 Alone

by biasharadigest

2019 marked another year where local and international businesses in the Kenyan market struggled financially as evident in the number of profit warnings. A total of 17 companies of the 63 listed firms on the Nairobi Securities Exchange issued profit warnings, meaning, investors should expect earnings to decline significantly (by at least 25%) when compared with that of the previous year, or the company may even make a loss. In most cases, companies attributed the profit warnings to tough economic conditions as well as slow economic activity. Nine out of the 17 companies that issued profit warnings this year also issued profit warnings in 2018.

Here is a list of companies that issued profit warnings in 2019.

1. Britam Holdings Limited

Insurance company Britam issued a profit alert in January 2019, citing tough insurance market and poor performance of the stock.

“The expected decline is mainly due to the performance of the stock market which has led to reduced returns from our equity investments; and the challenging operating environment which has adversely affected the business.

2. Crown Paints

Crown paint also issued a profit warning at the end of January, citing poor performance in its subsidiaries. The paint manufacturer blamed challenging market conditions in Rwanda, Uganda, and Tanzania, driving the losses.

Read: Crown Paints Issues Profit Warning due to Poor Returns from its Subsidiaries

3. East African Portland Cement

EAPC issued a profit alert in March following a streak of losses in the previous years. The company then had a crumbling debt of Ksh 10.8 billion, fighting high costs of inputs and production difficulties. EAPC sought to cut its staff base, to rein operating costs, and solicited a KSh 15b bailout from the government.

Read: East African Portland Cement Issues profit warning

4. Unga Group 

In March, Unga group cautioned that their profits might be more than 25% lower than the prior year, due to the lower demand for flour.

Read: Unga Group Issues Profit Warning as Half Year Profit Drops 40%

5. Kenya Re

Kenya Reinsurance Corporation Limited issued a profit warning in March, citing higher claims, forex losses, and impairment of assets.

“The expected decrease is mainly attributable to high claims reserves in the year, forex losses due to currency devaluations in some of our markets, unexpected reduction in income from (an) associate and impairment of an asset held for sale,” read a cautionary statement from the company.

6. National Bank

National Bank issued a profit warning in March, blaming its performance on increased impairment costs, and staff restructuring expenses.  

Read: National Bank issues profit warning less than a week to results deadline

7. Kapchorua Tea

Agricultural firm Kapchorua Tea issued a second profit warning in a row citing unfavourable weather patterns and high labor costs. The company also lamented on low prices of tea, which further affected their profits.

Read: Kapchorua Tea Issues Profit Warning

8. Williamson Tea 

Williamson Tea suffered through 2019, issuing a profit warning for the year ending 31 March 2019. Like Kapchorua, Williamson cited high labor costs and low prices as the forces behind their losses. The company pledged to cut employee costs, whose expense grew with time.

However, the year got better for the company, which announced losses of Ksh 65.9 million in November, down from Ksh 85.1 at a similar period in 2018.

Read: Williamson Tea Issues Profit Warning

9. Home Africa

Real Estate company took a hit from the slow growth in the real estate sector, attributing the shrinking profits to low purchasing power hence low demand. According to a company statementin July, part of the low demand is a result of poor access to credit.

READ: Home Africa issues a profit warning

10. Kenya Power 

In September, the company issued a profit caution, attributing the drop in profits too increased non-fuel costs in line with the firm’s long term strategy of growing cheaper and cleaner renewable energy.

Read: Kenya Power issues a profit warning

11. UAP Old Mutual 

UAP Old Mutual issued a profit warning in November, also citing a weak property market as the reason behind the declining profit. The company also cited uncertain political environments in South Sudan as a reason for the expected decline in profit.

Earlier in April, UAP-Old mutual posted a loss of KSh 518 million. This is as a result of increased competition, a tough economy, and the bear market.

Read: UAP Old Mutual Issues Profit Warning

12. Eaagads 

Eaagads Company Limited also expected slimmer revenues, evident in their November profit warning. The company reported a decline in coffee production, attributed to climatic challenges such as global warming. Moreover, Eaagads also blamed falling prices and high labor costs for the decline in profits.

READ: Eaagads Issues Profit Warning as Coffee Production Drops

13. BOC Kenya

The gas company issued a profit caution in November, citing lo demand for gas as well as a distressed economy.

Read: BOC Kenya Issues Profit Warning Citing Distressed Economy

14. Standard Group

Standard Group issued a notice of dwindling profits to its shareholders in December, citing increased newsprint costs. Moreover, the media company faced slim advertisement revenues as key clients lacked access to credit and faced tough economic times.

Read: Media firm Standard Group Issues Profit Warning

15. Nairobi Securities Exchange

The NSE also issued a profit warning in December, explaining that brokerage firms and investment firms faced tough economic situations. Brokerage firms such as Kestrel Capital, African Alliance Kenya, Standard Investment Bank, and Genghis CApital all faced a decline in brokerage commissions this year.

Read: NSE Issues Profit Warning

16. CIC Insurance Group

Adverse claims in key lines of business shaved the insurance group’s profits. CIC’s December’s profit caution is an extension of its 96% drop in profits for 2019’s first half as a result of costly life insurance claims.

Read: CIC Issues Profit Warning, Cites High Claims in Insurance Business

17. Kenya Airways

Kenya Airways continued to face turbulence in 2019, as the carrier anticipates thinner profits despite growing revenues. A statement from the company reveals that intense competition and new IFRS 16 reporting standards are the cause of the anticipated drop in profits.

Read: Kenya Airways Issues Profit Warning

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