NAIROBI, Aug 17 – Local oil marketing giant KenolKobil has announced a massive 187 percent loss for the first six months of 2009.
The Sh431.2 million loss totally wipes out a profit of Sh491.9 million posted in the second half of 2008.
The oil company says it has been adversely affected by rising international oil prices after an unprecedented drop between August and December 2008. In unaudited results sent to the Nairobi Stock Exchange, the company said it was unable to adjust prices in time in the different markets it operates in.
According to the statement dated August 17: “The refinery and pipeline storage system has been unable to meet market requirements for the region, hampering KenolKobil operations especially in Kenya.”
The statement, signed by Acting Chairman and Group Managing Director Jacob Segman said: “Distribution costs remained high due to alternative distribution solutions of getting product from Mombasa to Nairobi, Western Kenya and neighbouring countries to mitigate the unreliable pipeline distributions performance.”
The group which formally changed name from Kenya Oil Company this year says its half-year results were also affected by the global economic and financial meltdown, with the impact felt in the entire in the domestic, regional and international markets. It added that exports and aviation markets recorded heavy losses for the last quarter of 2008.
Mr Segman said: “The entire industry has seen a slow down in activity but the KenolKobil Group managed to increase volumes by 19 percent compared to the same period last year.”
The Group distribution costs increased by 12 percent over the 2008 six-month period, with 90 percent of the increase from Kobil Ethiopia having to cater for distribution across the vast country.
The group says its financing costs increased by six percent, of which 72 percent is from exchange losses, resulting from the depreciating and fluctuating of local currencies against the dollar.
“Going forward for the rest of the year, we expect that whilst the global economic climate struggles to recover, the adverse impact will continue to be felt in the region. It is expected that the volatility of oil prices, distribution constraints, unstable forex market, coupled with strong competition will continue to present challenges to the group,” said Mr Segman.
He said the company will continue focusing on expansion and profitable growth opportunities, adding that the management is strongly optimistic about the future of the group’s profitability.
The Group’s Board of Directors does not recommend the payment of an interim dividend.