KPLC released their H1’2017 results recording core earnings per share increase of 15.8 percent to Ksh.2.2 from Ksh.1.9. This was driven by a 5.1 percent increase in total revenue to Ksh.59.6 billion from Ksh.56.7 billion, and a 23.5 percent decline in fuel costs to Ksh.6.2 billion from Ksh.8.1 billion owing to a decline in the unit cost of fuel.
Key points to note include:
- Operating revenue increased by 9.6 percent y/y to Ksh.45.7 billion from Ksh.41.7 billion, driven by rising electricity sales due to expanded customer base
- Operating expenses increased by 5.1 percent y/y to Ksh.51.6 billion from Ksh.49.1 billion, driven by a 4.4 percent y/y increase in power purchase costs to Ksh.26.1 billion from Ksh.25.0 billion, due to (i) a 5.6 percent increase in unit purchases to 4,786 GWh from 4,532 GWh, and (ii) a 23.6 percent increase in transmission and distribution costs to Ksh.16.1 billion from Ksh.13.1 billion as a result of expansion of the company’s electricity network. Fuel costs however decreased by 22.9 percent to Ksh.6.2 billion from Ksh.8.1 billion, due to a decline in the unit cost of fuel
- This led to a reduction in the EBITDA margin to 13.2 percent from 14.6 percent in FY’2015
- Finance costs decreased by 11.6 percent to Ksh.2.3 billion from Ksh.2.6 billion, attributed to reduced short term borrowing arising from restructuring of the balance sheet
- Cash balances decreased by 93.2 percent to Ksh.0.9 billion from Ksh.13.5 billion due to aggressive implementation of capital projects
- Profit before tax declined by 1.7 percent to Ksh.5.6 billion from Ksh.5.7 billion, attributed to a decline in finance income by Ksh.0.7 billion as a result of reduced bank balances
- Profit after tax increased by 11.4 percent to Ksh.4.2 billion from Ksh.3.7 billion despite the 1.7 percent decline in profit before tax, as a result of a tax credit
- The Board of Directors did not recommend the payment of an interim dividend for the period.
In the future, sustained earnings for KPLC will be driven by:
- Kenya’s growing demand for power supported by the Kenyan government’s Last Mile Connectivity Project that seeks to have at least 70% of Kenyans connected to electricity by end of 2017
- Implementation of key capital projects through expansion and continued upgrade of the distribution network, which will generate higher sales