TPS in 25pc profit warning drop in 2014 earnings

February 17, 2015
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The company attributed the expected fall in profit to a challenging environment in Kenya caused by travel advisories issued by key source markets and insecurity concerns/FILE
The company attributed the expected fall in profit to a challenging environment in Kenya caused by travel advisories issued by key source markets and insecurity concerns/FILE
NAIROBI, Kenya, Feb 17 – TPS Eastern Africa (which owns Serena hotels and lodges) has announced that profit for the year ended December 31, 2014 will be 25 percent lower than in 2013.

The company attributed the expected fall in profit to a challenging environment in Kenya caused by travel advisories issued by key source markets and insecurity concerns.

The company says the challenging environment led to a significant slowdown in new leisure bookings and charter flights into Kenya.

“In the last quarter of the year, the Ebola epidemic origination from West African countries negatively impacted all African tourist destinations,” the company added.

The management also explained that the expected drop was due to the government’s introduction of VAT on tourism services and park fees in September 2013 that made Kenya uncompetitive compared to other destinations.

“The company in 2014 took measures to safeguard shareholders value, maintain market share, maintain the assets in good condition, so as to avoid compromising standards of product and services and have implemented efficiency measures to reduce energy, procurement and operating costs without sacrificing operating standards,” the company said.

The company’s after-tax profit for the first six months of 2014 dipped 71 percent to Sh41 million.

The accommodation and restaurants service sector dragged the growth of the Kenyan economy during the third quarter of 2014 to 5.5 percent which is lower than 6.2 percent recorded in the same period in 2013.

READ: Tourism sector slows Kenya’s economy in Q3

The reduction is attributable to both internal and external factors including the perceived health risks in Kenya due to the country’s geopolitical location and connectivity with West Africa.

“All the sectors of the economy recorded positive growths except accommodation and food services (hotels and restaurants) which has consistently been on the decline since last year,” the Kenya National Bureau of Statistic (KNBS) said in its quarterly review.

The economy was however supported by strong expansions of activities in construction, finance and insurance, wholesale and retail trade, information and communication, agriculture and forestry.

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