KenolKobil in Sh1.5b plan to fill Africa

July 28, 2011

, NAIROBI, Kenya, Jul 27 – Listed oil marketer KenolKobil plans to spend Sh1.5 billion on mergers and acquisitions across Africa in the current financial year.

Briefing investors on Wednesday, KenolKobil Group Chairman Jacob Segman said the investments would form a formidable force on the continent.

KenolKobil currently has a footprint in nine African countries and Mr Segman said it intends to open up new fuel stations as well as diversify its revenue streams.

“We need to build up our inventory because it’s a key factor for either success or failure in this market,” Mr Segman said.

On Tuesday the firm reported an 83 percent half year growth after-tax profit posting Sh2.16 billion in the six months ended June 2011.

Mr Segman said the company was strategically looking to increase its fuel storage capacity, improve its supply chain and grow its non-fuel related business lines.

Analysts at Standard Investment Bank said KenolKobil’s move to invest in infrastructure purchases would help it reduce its dependence on third party arrangements.

“Re-evaluation of KenolKobil’s assets is going to be held during 2011. We expect this to result in a higher depreciation charge in coming years and probably disclose some hidden value in some of the assets the company has acquired during the last few years,” they said.

In January, KenolKobil acquired Phoenix Uganda Petroleum Limited that had a depot with a capacity for 1,800 cubic metres of fuel and three service stations, raising its total depots and service stations in the Ugandan market to two and 66 respectively.

This was followed shortly by an acquisition of a depot complex in Burundi, through an outright purchase agreement, consisting of a fuel depot, dry goods warehouse and an office complex.

Mr Segman told investors that such strategic investments in its subsidiaries across Africa had shown promise as they performed well during the first half and remained bullish over their contribution to the bottom line in future.

“The acquisitions and expansion of storage facilities will play an important role in the group’s quest to expand its channels of supply and distribution within East, Central and Southern African regions,” he said.

Real estate also remains a key part of the company’s strategic focus. It has planned a $10 million (Sh857 million) project development in Kenya, Rwanda, Ethiopia and Zambia where KenolKobil intends to put up residential units and shopping complexes.

Mr Segman said that the company projected stronger growth performance in the second half of the year.

He however pegged this on the company’s ability to rise above the local industry challenges that exist, among them an unreliable government-owned distribution system.


Latest Articles

Stock Market

Most Viewed