Kenya Power turns Sh4.3 billion loss into Sh43.67 billion profit before tax

Kenya Power has reported a profit before tax of Sh43.67 billion for the year ended 30 June 2024, compared to a pre-tax loss of Sh.4.3 billion in the previous period. Profit after tax was recorded at Sh30 billion

According to Kenya Power, this performance was driven largely by price increases in revenue mostly from the energy consumption segment.

The company’s finance cost also declined due to the strengthening of the Kenya Shilling against major global currencies.

Revenue sources increased by 2.1%, from Sh150.98 billion to Sh231.12 billion in the year under review.

The improved performance was realised primarily from the new customers connected to the grid during the year, as well as increased economic activities, particularly in the manufacturing sector.

New Tariff Structure Boosts Sales

Implementation of a revised cost-effective base tariff structure in April 2023 also contributed to the improved sales.

During the year, finance costs decreased by Sh24.84 billion, mainly due to unrealised foreign exchange gain of Sh7.8 billion, compared to a loss of Sh6.87 billion in the previous period as a result of revaluation.

This gain was due to the appreciation of the Kenyan Shilling against the US Dollar and Euro, both of which represent approximately 90% of Kenya Power's loan portfolio.

Operating costs reduced from Sh143.48 billion the previous year to Sh150.61 billion.

This was driven by additional input purchased to support rising demand, as well as the high exchange rate earlier in the financial year.

The company’s revenues are billed entirely in Kenya shillings, power purchase contracts are predominantly denominated in foreign currencies.

As a result, the strengthening of the Shilling in the second half of the year led to an increase in cost of sales that was lower than the growth in revenue, thus contributing to the higher gross margin.

Operating expenses rose to Sh46.28 billion, up from Sh37.28 billion in the previous year.

This increase in transmission and distribution expenditure was occasioned by a 92% rise in wheeling charges by the leasing transmission network and the recruitment of additional technical staff to support business operations.

Staff costs were also impacted by the implementation of provisions from the Finance Act 2023 and inflation-related adjustments.

Through careful cost management and board-led budgeting, we aim to maintain stable margins despite inflationary pressures.

Negative working capital

Although the working capital remains negative, it has shown consistent improvement, increasing from negative Sh42.4 billion as of FY 2019-2020 to negative Sh27.44 billion by the end of the year under review.

This positive trend reflects the Company’s ongoing commitment to optimising its financial resources and strengthening its overall financial performance.

Dividend payout

Kenya Power has announced a final and first dividend of Sh0.70 per ordinary share for the year ended June 30, 2024, subject to the shareholders’ approval.

The money is expected to be distributed to shareholders in the register at the close of business on January 2, 2025, and dividends expected to be paid on or about January 31, 2025.