, NAIROBI, Kenya, Jul 28 – KenolKobil Limited has announced a profit after tax of Sh1.17 billion for the first half of the year representing a 373.5 percent increase over the corresponding period in 2009.
Last year, the oil marketer made a loss of Sh431 million in what it attributed to a difficult operating envionment characterised by a sharp dip in fuel prices.
“First half (of) 2009, will be remembered as the most difficult period experienced by the oil industry. The sales of the expensive stocks carried into 2009 at very low market prices resulted in reported losses for KenolKobil,” said Chairman and Group Managing Director Jacob Segman.
He added that the company was however been able to turn around this situation in the second half where it posted a full year profit.
Net sales improved by 40 percent over the same period, being a reflection of more stable pricing environment internationally and in the regional markets especially in its subsidiaries outside Kenya. These improvements were mainly due to improved group inventories position at the beginning of the year, coupled with relatively stable international oil prices and selling prices.
Exports and aviation which had recorded heavy losses in first half 2009, have registered good profits in 2010.
“Increased group focus on high margin business lines has positively impacted the bottom line. Inefficiencies of both the (Kenya Pipeline Company) Pipeline and (Kenya Petroleum Refineries Limited) Refinery in Kenya, however, continue to negatively impact on performance of the Group, particularly on the Kenyan operation,” Mr Segman complained.
The board has not recommended the payment of an interim dividend but pledged to consider this decision in a few months.
An improved management of overhead costs has further worked in the company’s favour resulting in a nine percent reduction in the first half of the year.
“This is a positive trend in view of the fact that the group has very young subsidiaries that are still in their development curve. Distribution costs have continued their upward trend now registering a growth of 19 percent over 2009 due to continued use of road transport, transporting products up from Mombasa to upcountry in Kenya and to neighboring countries,” he added.
The subsidiaries continue to perform well with strong performances registered by Zambia and Rwanda, in particular. The newest outlet, Burundi is registering steady growth and is expected to deliver a good return on investment this year, the MD added.
“Ethiopia continues to be a challenging market due to its regulated low margins on fuels, but focus on high margin products such as lubricants and bitumen has seen an improvement in performance over last year,” the company said.
Going forward, Kenol is optmistic that it will post good results for the second half on the back of product availability in Kenya Pipeline system and higher efficiency at KPRL.