NAIROBI, Kenya, Feb 25 – Gas manufacturing company BOC gases has announced a 25 percent decline in after tax profit of Sh200 million for the year ended December 2008, compared to the same period last year.
BOC Managing Director John Kariuki said turnover for the period grew by seven percent, though operating profit declined by eight percent to Sh295 million.
“Profit after tax is five percent lower than last year after providing for costs attributed to the outstanding acquisition of Carbacid Investments Limited and additional provisions against stocks,” Mr Kariuki said.
He attributed the decline in profit to challenges of increased operating costs driven by higher transport and energy prices.
“We are beginning to feel the effects of the post election violence that rocked the country and the subsequent global economic crisis is not making it any better,” said the MD.
He revealed that the company is projecting a challenging business environment for this year especially due to the trickling down effects of the global recession.
The company’s board has recommended a final dividend of Sh4.80 per share to bring the total dividend for the year to Sh6.80 per share.
Meanwhile, Mr Kariuki is adamant that BOC will not open a new bid for the Carbacid takeover plan.
“I think what we offered them then is still relevant even in the current economic situation, notwithstanding that most share prices in the market have actually declined,” he said.
BOC Kenya’s pursuit for Carbacid has been on the table over the last 38 months after the Capital Markets Authority declined to endorse the deal, arguing that BOC had not met all the required terms.
Consequently, the shares of the two listed gas manufacturers were suspended from trading at NSE on December 2005, to allow BOC to process the transaction, but over the period the stock market has witnessed sharp losses in share prices.
On Tuesday, Carbacid Investment announced a 40 percent increase in profits for the six months ended January 2009.
While releasing these results Carbacid’s board asked BOC Kenya to terminate its takeover plan and make a new bid based on the merits of the market forces.
This is the third time that Carbacid is asking BOC Kenya to withdraw the offer, but BOC directors have declined, arguing that the matter will be decided by the High Court, where the takeover tussle was taken after the capital markets regulator refused to approve the deal.
“The acquisition of Carbacid is a matter still pending in court but we have been having various discussions on the best way forward. The last meeting was only last month,” he said.
Mr Kariuki however intimated that no conclusive decisions had been made yet.