Express Kenya bet on real estate fails to curb losses

Express Kenya truck before it lost a contract to transport EABL products. PHOTO | FILE 

By George Omondi

In Summary

• Two years since it took a big bet on the booming real estate segment, the firm has remained in the financial hole, having reported a net loss of Sh23.2 million for the six months to June.
• The firm’s management attributed the increases in cost to the deliberate move into real estate sector which it entered with a bang, rolling out a plan to construct 1,200 units at one go.
• In its hey days as the darling of the logistics sector, Express Kenya strode the country’s landscape providing clearing and forwarding services and warehousing services to blue chips firms including EABL.

Nearly five years since the acrimonious exit of the East African Breweries Limited (EABL) from its list of high-profile clients, transport and logistics company, Express Kenya, continues sink into the loss pit.

Two years since it took a big bet on the booming real estate segment, the firm has remained in the financial hole, having reported a net loss of Sh23.2 million for the six months to June.

To the firm’s owners, the performance translates to a loss of 66 cents per share, a more lethal value erosion compared to 28 cents they shed in the first half of last year.

The data filed with NSE shows that the loss resulted from a 48.5 per cent increase in total operating expenses and a 272.9 per cent increase in finance costs (Sh8.7 million).

The firm’s management attributed the increases in cost to the deliberate move into real estate sector which it entered with a bang, rolling out a plan to construct 1,200 units at one go.

As short term costs rise to accommodate the real estate ambition, the year on year revenues dropped 33.6 with management citing tough operating environment.

In its hey days as the darling of the logistics sector, Express Kenya strode the country’s landscape providing clearing and forwarding services and warehousing services to blue chips firms including EABL.

READ: Express Kenya in red as loss of EABL contract bites

Its five divisions— sea freight, air freight, packing and removals, transport, as well as warehousing – both enjoyed brisk business.

Its war chest included a fleet of over 80 movers, including trucks, small vans, trailers, low loaders of up to 80 tons capacity, side loaders, cladded stainless steel tankers and forklifts.

It also had warehouses occupying 50,333 cubic metres and a parking space of 40,000 cubic meters. It has since announced plans to shift fully to real estate after an acrimonious fallout with EABL.

In recent years, the firm has also lost other clients to competitors due to theft at its warehouses which also exposed it to huge legal liabilities.

Transport and Logistics sector players have cited a number of challenges that include theft by employees, bribe demand by police officers and weighbridge corruption driven by the ever changing regulatory requirements.