Kenya Power has shown signs of recovery in its half-year results after posting a profit before tax of KSh332 million following a loss before tax of Ksh7 billion for the year ended June 2020.
The full-year performance was largely impacted by the effects of the COVID-19 on the operating environment and a one-off increase in impairment for inventories amounting to Ksh3.65 billion following a business decision to take a more prudent approach in accounting estimation for slow moving and obsolete stock.
Due to the pandemic, electricity sales remained largely unchanged at 8,171 GWh for the period under review compared to 8,174 GWh the previous year while total revenue grew marginally from Ksh133.1 billion to Ksh133.3 billion, representing a 0.09 percent increase.
During the period, the Company also incurred unrealised foreign exchange losses of Ksh3.53 billion resulting from the depreciation of the shilling against the world’s major currencies.
On the other hand, the half-year trading results for the company registered significant improvement compared to the full year posting a profit before tax of Kshs.332 million.
During the half-year period, electricity sales increased to Ksh61.49 billion from Ksh61.24 billion recorded during a similar period in 2019.
At the same time, net operating expenses reduced by Ksh4.3 billion to Ksh23.43 billion while finance costs went up by Ksh4.22 billion to Ksh8.05 billion, mainly as a result of unrealised foreign exchange losses occasioned by the depreciation of the shilling against major foreign currencies, occasioned by the negative impacts of the Covid-19 pandemic on the macroeconomic environment.
The Company’s financial performance was impacted by the measures that were put in place to contain the spread of the corona virus. The effect of these restrictions was reflected in suppressed demand for electricity and revenue collection.
“The pandemic had a primary impact on our sales and revenue collection as companies scaled down operations and customers were unable to meet their bill obligations on time due to suppressed incomes,” said Kenya Power’s Managing Director & CEO, Bernard Ngugi.
He added that the situation was aggravated by the Company’s inability to exercise strict revenue collection measures on hospitals and water companies being critical services providers during the height of the pandemic.
The Company has embarked on a turnaround strategy that is aimed at improving the financial and operational aspects of the business while balancing social responsibilities to enhance business sustainability.