Kenya Power has issued a profit alert after seeing a plunge in demand for electricity, signalling the wider struggle for all other businesses amid the Covid-19 lockdown.
Energy consumption is a key barometer used to gauge economic activity, with increase or decrease in demand indicating shifts in level of production.
Kenya Power in a notice advised its shareholders that net earnings for the full-year ending June 30 will drop by at least 25 per cent, signalling a wider, grim economic outlook.
“The Covid-19 pandemic has adversely affected our business operations leading to slow growth in electricity sales and an increase in financing costs resulting in reduced earnings,” the firm said in a statement last week.
This is the third earnings cautionary statement in a row that the Nairobi Securities Exchange (NSE) listed utility firm has issued, raising eyebrows on the state of its financial affairs.
Kenya Power’s profit after tax for the 12-month period to June 30 this year is projected to decline to at least Ksh196.5 million ($1.96 million), from Ksh262 million ($2.62 million) last year.
The electricity distributor’s net earnings dropped by 92 per cent to Ksh262 million ($2.62 million) from Ksh3.26 billion ($32.6 million) in 2018, with earnings per share plummeting by the same margin to Ksh0.13 ($0.001) from Ksh1.67 ($0.016) in the same period, according to its audited financial statements.
On Wednesday the energy firm’s stock on the NSE fell by 7.8 per cent to Ksh2.01 ($0.02) per share from Ksh2.18 ($0.021 per share on Tuesday (June 16).
Data from the Kenya National Bureau of Statistics shows that the firm’s electricity sales during the first four months (January-April) of this year reminded relatively flat at 2.92 billion Kwh compared to 2.95 billion Kwh in the same period last year.
During the same period the amount of electricity generated also remained flat at 3.7 billion Kwh.
“Based on a review of the company’s financial performance, the board of directors has determined that the earnings for the financial year ending June 30, 2020, are projected to be lower than the earnings for the previous year,” said Kenya Power.
Kenya reported its first case of coronavirus on March 13, and since then the number of infections have risen to more than 4,000.
The government’s containment measures including social distancing and restriction of movements have negatively impacted performance and productivity of private businesses and State agencies
Source: The East African