Jevans Nyabiage
21 August 2009
Nairobi — BOC Kenya has reported a 20 per cent dip in pre-tax profit for the first half of 2009 and warned of a more depressed second half of the year.
In the six months ended June 30, the gas maker's profit before tax declined from Sh184 million recorded over the same period last year to Sh147 million.
In the period under review, turnover grew by a marginal 4 per cent from Sh619 million posted during the first six months of last year to reach Sh641 million .
The company's managing director John Kariuki attributed the falling returns to a challenging operating environment coupled with the global economic slowdown.
Lower demand
"The reduced activity in the region led to a lower demand for our products. The escalating input costs, especially power and raw materials have put pressure on our margins," said Mr Kariuki on Friday during an investor briefing at a Nairobi hotel.
BOC, a subsidiary of Germany's Linde said the outlook for the company's performance in East Africa's biggest economy Kenya was gloomy as far as the foreseeable future is concerned.
As part of its initial strategies to improve the situation, BOC Kenya will invest Sh80 million in its main air separation plant to enhance capacity and efficiency.
Supply chain
The initiatives target processes within its production, distribution and supply chains. "We are keen as a company to implement cost-reduction measures to stem the erosion on the overall turnover," said Mr Kariuki.
He said the ongoing power-rationing programme would slowdown recovery efforts in many firms and worse still, reverse the minimal recovery gains that have been realised in recent times.
Suspended shares
Mr Kariuki said the company is anxious to re-list on the Nairobi Stock Exchange. Its shares were suspended in late 2005 after the regulator, Capital Markets Authority, ruled against its attempted takeover of carbon dioxide maker Carbacid.
BOC directors have recommended an interim dividend of 40 per cent which translates to Sh2 for every share held and amounts to a total bill of Sh39 million.
BOC Kenya Ltd, along with its subsidiaries, manufactures and sells industrial and medical gases as well as welding products. The company's subsidiaries include East African Oxygen Ltd, BOC Tanzania Ltd and BOC Uganda Ltd.