Profit alerts rise to 12 as companies cite cost concerns

Trading room of the Nairobi Securities Exchange (NSE). FILE PHOTO | NMG

Listed logistics company Express Kenya Limited has issued a profit warning for the year ending this month due to the slowdown in economic activities in the country which it says has significantly reduced demand for logistics operations. storage.

Coming just a day after another listed company, Kakuzi Plc, issued a similar statement, Express Kenya’s notice brings to 12 the growing list of listed companies that have issued earnings alerts to investors this year. The majority of them cite a difficult operating environment that involves high costs of doing business.

Read: Car & General issues profit warning following rising costs

Others who have issued warnings since March include Sameer Africa, Crown Paints, WPP Scangroup, Longhorn Publishers, Sasini, Car & General, Nation Media Group, Centum Investment Company, Unga Group and Kenya Power.

Like Kakuzi, Express expects its profits for the current financial year to be at least 25 percent lower than last year.

This means its profits for 2023 will not exceed Sh56.1 million, after reporting a net profit of Sh74.8 million last year.

“The company’s warehousing operations are still significantly weak due to reduced demand and weak economic activities resulting in reduced revenue, which further negatively impacts business performance,” said the company in a press release published Thursday.

“Based on a review of the Company’s financial performance, the Board of Directors has determined that profits for the financial year ending December 31, 2023 are expected to be at least 25 percent lower than profits for the year ending December 31, 2023. last year.”

Last year, Express Kenya reversed a net loss of Sh82.9 million it had recorded in the financial year ending December 2021.

Kakuzi, on the other hand, in a statement on Wednesday forecast a drop of at least 25 percent in net profit compared to the profit of Sh845.8 million recorded last year, meaning that the figure for this year will not exceed 634.4 million shillings.

The agricultural company attributed the forecast to expected losses resulting from a significant drop in demand and price of macadamia in the global markets of China, Japan and the United States.

“The expected decline in net profit for the full year is mainly due to our macadamia business which is expected to post a loss due to a significant decline in demand and prices in global markets. However, our other crops are performing as expected, with strong performance expected for avocado,” Kakuzi said.

Last year, the company declared a record dividend of 24 shillings per share, totaling 470.3 million shillings for the financial year ending December 2022, after its net profit more than doubled from 319 .7 million shillings posted for the financial year ending December 2021.

The payment represents a 9% increase from the 22 shillings per share, or 431.1 million shillings, paid for 2021.

The improvement in profits was attributed to growing demand for raw materials following the recovery from the Covid-19 pandemic, as well as the weakening of the local shilling against major global currencies such as the US dollar.

Read: Kenya Power issues profit warning following foreign exchange losses

In March this year, Kakuzi announced plans to increase its avocado exports to the Chinese market, which he said has the potential to become one of the main destinations for Kenyan fruits.

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