Total Kenya’s profits have dropped to 2.3 billion shillings from 2.74 billion shillings, a 15.5 percent dip compared to the previous year to what the company attributed to higher duties and operating expenses.
For the year 2018, sales stood at 107.9 billion shillings, a drop by 3.5 billion shillings. The sales are said to have been weighed down by the rise of 3.1 billion shillings in indirect taxes and levies which closed the year at 28.8 billion shillings.
Operating expenses for Total Kenya in 2018 stood at 5.8 billion shillings, an 8 percent increase (428 million shillings) due to increased depreciation on property, plant, and equipment.
Despite the drop in profits, shareholders will get the same dividend they got in 2017 of 1.30 shillings per share with the total payout estimated to be 388.1 million shillings.
Total Kenya recorded a 15.6 percent y/y decline in EPS to 3.67 shillings. This decline in profitability was impacted by a 3.2 percent dip in gross sales, lower finance income (-25.3 percent y/y), other income (-12.7 percent y/y) and increased operating expenses (7.9 percent y/y).
In spite of lower gross sales, “we note improvement in the gross margin to 7.7% from 7.4% in FY17. This is attributable to lower participation in the low-margin Open Tender System (OTS) business and increased sales in the Retail and Consumer segments of the business”
Forex losses decreased to 1.3 million shillings from 77.4 million shillings in FY17 with the improvement attributed to the stability of the Kenya Shilling against the USD in the year under review.
Total’s operating cash flow increased to 13.0 billion shillings from 2.1 billion shillings in FY17. This is on the back of effective management of working capital (current ratio multiple at 1.8x, the best in the past 3 years).
This is despite volatility in global oil prices in 2018 which saw global crude price touch a high USD 86.29 in October. In 2019, “we expect the company to carry on with its prudent working capital management thereby maintaining positive working capital and low debt levels (c.30 percent debt/equity)”.