Kenya Power post Sh30billion net profit in year ended June 30
Previously perennial lose making utility far, Kenya Power has shifted the tide to post a Sh30billion net profit in the year ended June 30, 20224 from a Sh3.19billion loss the previous year.
The profit is largely due to strengthening of the Kenyan shilling, which now trades at Sh129 against the USD.
For the better part of last year, the shilling had deteriorated heading to Sh160 against the US dollar.
The listed power distributor has attributed the much-improved results on a 21 per cent increase in sales from commercial and industrial customers and the strengthening of the shilling against the US dollar during the period under review.
The firm’s sales rose to Sh231 billion from Sh191 billion while finance costs dropped by a massive Sh25 billion due to an unrealised foreign exchange gain of Sh7.9 billion compared to a loss of Sh16.9billion in the previous financial year.
The board of the electricity firm has recommended a dividend payout of Sh0.70 per ordinary share, breaking a long-standing dividend dry spell.
According to Kenya Power, during the year, finance costs decreased by Sh24.84billion, mainly due to unrealised foreign exchange gain of Sh7.88 billion, compared to a loss of Sh16.87billion in the previous period, as a result of loan revaluations.
“This gain was due to the appreciation of the Kenyan Shilling against the US Dollar and Euro, both of which represent approximately 90 per cent of our loan portfolio. Power purchase cost increased from Sh143.58 billion the previous year to Sh150.61 billion.” Kenya Power said in a statement.
It added that: “This growth was driven by additional units purchased to support rising demand, as well as the high exchange rate earlier in the financial year. While the Company’s revenues are billed entirely in Kenya shillings, power purchase contracts are predominantly denominated in foreign currencies.”
As a result, the strengthening of the Shilling in the second half of the year led to an increase in the cost of sales that was lower than the revenue growth, thus contributing to the higher gross margin.
Kenya Powers said operating expenses rose to Sh46.28 billion, up from Sh37.28 billion in the previous year.
This increase in transmission and distribution expenditure was occasioned by a 92 per cent rise in wheeling charges for the expanding transmission network and the recruitment of additional technical staff to support business operations.
