Kenyan listed firms are offering dividends to shareholders for 2021, signalling recovery from the Covid-19 economic fallout even as prospects for the country’s full economic resurgence remain uncertain.
Election, fuel prices
Market analysts expect rising political temperatures ahead of the August general election, rising fuel prices, lower agricultural output due to potential adverse weather and the desert locust infestation in the northern parts to dampen the prospects of recovery.
“We expect the discovery of new Covid-19 variants, the general election and slow vaccine rollout to continue weighing down the economic outlook. On the upside, we believe that the relaxation of lockdown measures will lead to improved investor sentiment,” analysts at Cytonn Investments Ltd said.
According to the National Treasury increased public expenditure pressures would place a strain to the fiscal space while the emergence of Covid-19 variants could lead to renewed disruption to trade and tourism.
Some firms listed on the Nairobi Securities Exchange that have published either their half-year or full-year financial statements for 2021 show improved earnings for shareholders to cash in.
In 2020, some listed firms including banks suspended dividend payments while others opted to issue bonus shares in attempts to preserve adequate capital to navigate through the Covid-19 storm.
Analysts at Sterling Capital saw economic recovery begin with the easing of the Covid-19 containment measures and gradual resumption of economic activity last year.
However, in their market report dated December 2021, they argue that hurdles to economic recovery include the slow pace of global economic recovery, uncertainty over the political environment, high inflation and depreciation of the local currency.
So far, mobile phone operator Safaricom has declared an interim dividend of Ksh0.64 ($0.005) per share after its net profit for the six months to September 30, 2021, grew 12.1 percent to Ksh37.05 billion ($327.87 million).
East African Breweries Ltd recommended an interim dividend of Ksh3.75 ($0.03) per share after its net profit for the six months to December 2021 surged to Ksh8.73 billion ($77.25 million) from Ksh3.79 billion ($33.53 million) in 2020.
“The trading environment remains uncertain with a lingering social-economic impact of the pandemic, excise tax volatility, and political changes on the horizon. We are cautiously optimistic that improved consumer incomes, on-trade recovery and off-trade resilience will continue apace, fuelling our net sales growth momentum across East Africa.”
British American Tobacco Kenya proposed a dividend of Ksh50 ($0.44) per share to its shareholders after its net profit for the year ended December 31 increased by 18 percent to Ksh6.48 billion ($57.34 million), the firm said.
This translates to a total cash dividend of Ksh53.50 ($0.47) per share after an interim dividend of Ksh3.50 ($0.03) per share was awarded during the year.
The cigarette maker attributed the performance to property valuation gain of Ksh1.2 billion, and a relatively favourable trading environment as the government eased Covid-19 restrictions.
Car and General (K) Plc has offered to pay its shareholders a final dividend of Ksh3.20 per share for the year ended September 30 2021 including a bonus issue of one new share for every one held with a view of recapitalising the company with an additional Ksh200.51 million ($1.77 million).
According to the Group’s annual report, net profit increased to Ksh887 million ($7.84 million) from Ksh274 million ($2.42 million) in the previous year.
“We believe uncertainty will persist in 2022 given the upcoming elections and continuing impact of Covid-19 on the business environment,” said Nicholas Ng’ang’a the group’s chairman.
The year to September 30 was positive in spite of the impact of Covid-19. Overall sales in Kenya grew by 55 percent while those abroad grew by 22 percent, with Uganda and Tanzania accounting for over 35 percent of the Group’s sales.
Publisher Longhorn made a net profit of Ksh15.09 million ($133,539.82) for the six months to December 31 compared with a loss of Ksh145.33 million ($1.28 million) in the same period in 2020.
On the other hand, utility firm KenGen’s net profit for the six months to December 31, 2021, declined by 1.38 percent to Ksh5.12 billion ($45.3 million) from Ksh5.05 billion ($44.69 million) in the same period, with the board choosing not to declare an interim dividend.
Liberty Kenya Holdings issued a profit warning that net earnings for 2021 will be lower by at least 25 percent than the previous year, attributing it to the pandemic, resulting in significantly higher risk claims. In the nine months to September 30, all banks reported higher net profit with Absa (Kenya), KCB and Equity being top performers, and all bank stocks reported price appreciation.
Unga Group’s net profit for the six months to December 31 also declined by 90 percent to Ksh8.45 million ($74,778.76) from Ksh83.47 million ($738,672.55) in the same period the previous year due to reduced sales in both human and animal nutrition segments.
As a result, Unga issued a profit warning that its full year net earnings are likely to be at least 25 percent lower than those of 2020.