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KenolKobil profit up 47pc

NAIROBI, Kenya, Apr 7- Buoyed by strong performance of its subsidiaries outside Kenya, KenolKobil Group has announced a 47 percent rise in profit after tax to Sh1.29 billion for the year ended December 31.

This is the first time that the Group is reporting a full 12 month-calendar year from January to December 2009.

 “Sales for the full year compared to January – December 2008 was down by 17 percent mainly due to the lower cost of oil.  The top line-gross profit was down 11 percent driven by the same. Financing cost for 2009 compared with 2008 was down by 71 percent and this has had a major impact across the Groups’ profitability,” said a statement signed by the Acting Chairman & Group Managing Director Jacob Segman.

The Directors recommend a final dividend of Sh3.25 per ordinary share subject to approval at the forthcoming Annual General Meeting on May 20, 2010.

Although the Group posted losses in the first half of the calendar year due to a “sharp drop in oil prices”, it was able to recover in the second half supported by the good performance of its operations, substantial drop in the cost of financing as well as a Sh307 million capital gain from the disposal of its non performing and non core assets.

“Subsidiaries performed strongly, including Ethiopia even though margins on fuels are regulated and very low,” he said adding that they were able to make good return on investment particularly in their operations in Rwanda, Zambia and Uganda.

Tanzania at the same time continued to play a crucial role in the distribution channels to Rwanda, Uganda, DRC and Zambia. KenolKobil entered Burundi last year making it the seventh member in the KenolKobil Group, a decision that was informed mainly by the political stability in the Central African region and the country’s decision to join the East African Community and it already has 14 service stations.

Mr Segman expressed optimism that with these economies showing signs of recovery, the Group would be able to capitalise and grow its business.

He further added that as more multinationals continue to divest from the Central, Eastern and Southern African Regions, KenolKobil would on the other hand position itself to acquire additional shares and assets from these firms.

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The Group has however faced challenges in its implementation of its “Move South Strategy” where its plans to acquire the Shell & BP operation in Zimbabwe has met resistance from the Zimbabwean government. Despite this setback, Mr Segman is confident that they will come up with a plan that will enable them to achieve their goal of venturing into the Zimbabwean market.

“It is quite unfortunate that the Zimbabwean Government through the National Indigenisation and Economic Empowerment Fund has recently blocked the deal.  KenolKobil, being an African Down and Mid-stream Oil Company, continues to formulate a proposal which will secure approval for investment in Zimbabwe,” he maintained.

Going forward, the MD expects that although ullage constraints in pipeline and storage system will continue, he said their relationship with the Kenya Pipeline Company would improve and this would positively affect the group’s distribution cost in Kenya and the neighbouring countries.

“The Group will continue developing the LPG business line with new storage and filling plants. In Kigali the project is already completed and in Kampala (it is) under construction.  Other investment and growth are expected to be in non fuel sectors, lubricants and trading desk,” he said of their future plans.

Already the Group has announced a 25.5 percent acquisition of a Zambian lubricants firm Lublend Limited through which it hopes to strengthen its market share in the lubricants business in the South African country.

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