KenGen slashes dividend pay as profit dips 46pc

Corporate News

Kris Senanu, deputy CEO, AccessKenya. PHOTO | FILE 

By DAVID HERBLING

In Summary

• The power generator’s net profit dropped 46 per cent to Sh2.8 billion compared to Sh5.2 billion the year before when it benefited from tax allowances due to large capital expenditure.
• The reduced earnings has seen KenGen declare a lower dividend payout of Sh0.40 per share, down from the previous Sh0.60.

The Kenya Electricity Generating Company (KenGen) has cut dividend pay by a third after net earnings nearly halved in the year ended June, in the absence of tax credits that it enjoyed a year earlier.

The power generator’s net profit dropped 46 per cent to Sh2.8 billion compared to Sh5.2 billion the year before when it benefited from tax allowances due to large capital expenditure.

The reduced earnings has seen KenGen declare a lower dividend payout of Sh0.40 per share, down from the previous Sh0.60.

KenGen’s stock closed at Sh12.95 on Thursday, representing a 25 per cent drop over the past one year. Its financial performance is in stark contrast to that of power distributor Kenya Power which nearly doubled net profits, grew revenue by a third and ended its dividend drought on the back of higher electricity tariffs.

“Profit after tax declined due to tax expense in the current year compared to tax credit in the previous year,” said Mr Albert Mugo, KenGen’s managing director.

This is the biggest drop in KenGen’s profitability since it listed on the Nairobi Securities Exchange through an initial public offering in 2006.

It also marks the first time since listing that the State-owned power producer has cut dividend pay. KenGen said that electricity revenues from sales to Kenya Power rose marginally to Sh17.4 billion in the review period compared to Sh16.4 billion the year before.

Its generation capacity grew 7.7 per cent to 1,335 megawatts following the connection of 70 MW of steam power from the Olkaria project and a further 25.6MW from geothermal wellhead units.

READ: KenGen adds geothermal power to grid

Operating expenses rose 11 per cent to Sh11.8 billion in what was attributed to increased generation and maintenance costs, staff wages and insurance expenses.

Mr Mugo said KenGen is banking on additional capacity from the 280 MW Olkaria project, 20.4 MW from the Ngong wind farm and a further 25 MW from the mobile steam wellhead units – which will go on stream over the next eight months.

“The full benefits of these plants will be realised in the current financial year,” he said in a statement.

Kenya Power’s net earnings increased 88 per cent to Sh6.4 billion in a similar period compared to Sh3.4 billion a year earlier. This saw the firm reward shareholders by declaring a dividend payout of Sh0.50 per share.