Kenya Power Profit Plunges to Lowest in Decade on Bad Debts

(Bloomberg) -- Profit at Kenya’s sole power distributor fell to the lowest since 2008 in the year through June.

Kenya Power & Lighting Company Ltd.’s net income declined to 1.92 billion shillings ($19 million) as coverage for bad debts jumped eight-fold from a year ago to 6.1 billion shillings, acting Finance General Manager Ambrose Lamaon told reporters Friday in the capital, Nairobi.

“The drop in earnings is due to higher provisions for doubtful debts,” Lamaon said. “We had to provide more to meet the required standards in accounting.”

Revenue grew 3.8 percent to 95.5 billion shillings, the slowest pace since 2016 when it rose 5.7 percent, according to data compiled by Bloomberg.

“The year under review has been a very challenging period due to poor hydrology and negative sentiment on the company,” acting Chief Executive Officer Jared Othieno said during the earnings presentation. “I can assure you the next financial year will have a better trading result.”

Auditors gave a qualified opinion due to the company’s level of borrowings and bad debt provision, Othieno said. The company delayed its earnings presentation following management changes after its CEO and other senior management were charged with economic crimes in July, amid a widening government crackdown on corruption. The officials denied more than six charges of economic crimes, abuse of office and conspiracy to defeat justice.

Total borrowings advanced to 113 billion shillings by June 2018 from 122 billion shillings a year earlier. Of this, short-term loans climbed to 16.1 billion shillings from 10.9 billion shillings, Lamaon said. “We are looking to extend short-term debt to longer tenors,” Othieno said.

Kenya Power shares have fallen 62 percent so far this year, touching a 15-year low of 3.45 shillings apiece as of 1:34 p.m. in Nairobi.

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