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Kenya gas firm profit slumps

NAIROBI, Kenya, Feb 19 – Industrial gas supplier BOC Gases on Friday announced a 21 percent slump in its profit after tax, posting Sh231.6 million for the year ended 31 December 2009.

The company posted a profit before tax of Sh295 million in the corresponding period in 2008.

Commenting on the results, BOC Managing Director John Kariuki attributed the drop to declining demand for its products as well as high input costs.

“The high cost environment put pressure on our margins with reduced demand and some of our costs we were not able to pass through to our customers given the performance f the various sectors throughout the year,” Mr Kariuki said.

Without divulging much detail, Mr Kariuki said the collapsed acquisition of Carbacid Investments had also influenced the company’s profitability.

In October 2009, BOC and Carbacid Investments agreed to an out-of-court settlement after a failed takeover bid and subsequently had its shares reinstated at the Nairobi Stock Exchange.

Lack of adequate resources saw the company fail to capitalise on capturing the health sector but Mr Kariuki expects the situation to improve in 2010.

“We expected some opportunities in the health sector but were affected by lack of funding but we see steady improvement in the 1st quarter,” he said.

Turnover remained steady posting Sh1.2 billion.

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Mr Kariuki said the company would be embarking on a number of cost saving initiatives in an effort of bringing down its operating costs and improving its performance in 2010.

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“We think these initiatives will address efficiencies at our plant and will have a significant impact on our performance in 2010,” the MD said.

“We see potential with increased infrastructural development this year especially in road expansion, transport, fabrication and construction which is a major area for us,” he said.

Mr Kariuki was however quick to add that growth in 2010 would be greatly dictated by the country’s political landscape.

The BOC Board has recommended a final dividend of Sh4.80 bringing the total to Sh6.80 per share, a similar payout to the previous year.

BOC Gases is a subsidiary of Germany\’s Linde AG.

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