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The East African : April 14th 2014
64 APRIL 12-18,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,905.46 -0.07% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 1,967.83 -0.49% USE All Share Index Uganda 1,493.00 -0.67% RSE All Share Index Rwanda 147.87 0.79% JSE All Share Index South Africa 47,902.10 -0.70% NGSE All Share Index 39,083.66 Nigeria - 1.02% Kenya’s oil ma≥kete≥s bounce back f≥om losses I t was just a rough patch: That was the silent mes- sage from Kenya’s two Nairobi Securities Exchange-listed oil marketers — KenolKobil and Total — as they delivered better than expected profit figures after a turbulent two year period characterised by high operating costs. KenolKobil came out of the red, posting Ksh558 million ($6.5 million) in net earnings in the year to December, up from a net loss of Ksh6.2 billion ($72.9 million) in 2012. Total Kenya’s net earnings grew from a loss of Ksh202 million ($2.32 million) in 2012, to Ksh1.3 billion ($14.94 million) in 2013. The firm repaid shareholders handsomely, with its dividend trebling to Ksh0.60 ($0.006) from Ksh0.20 ($0.002) the previous year. Kenol paid a dividend of Ksh0.1, having paid nothing in 2012. The comeback by the two companies followed the restructuring of their businesses. KenolKobil laid off some of its staff, sold non-core assets and exited the low margin, high volume business, concentrating on the high margin business. The company says it is seek- while the sale of non-core assets generated Ksh880 million ($10.3 million). Its finance costs dropped 28.9 per cent to Ksh1.6 billion ($18.8 million) after the company renegotiated the interest on its outstanding debt and further reduced its borrowings. Foreign exchange losses — which were responsible for its loss in 2011 — fell 97.7 per cent to Ksh105.3 million ($1,2 million), from Ksh4.6 billion ($54.1 million). Total has concentrated on The comeback by the two companies followed the restructuring of their businesses. KenolKobil laid off some of its staff and sold noncore assets. ing to resolve disputes as well as improve control of its forex hedging, trading and capital activities. The new strategy of concen- trating on high margin business is partly responsible for the 43 per cent drop in revenue to Ksh109.6 billion ($1.3 billion), from Ksh192 billion ($2.2 billion) the previous year, Total Kenya’s earnings grew in 2013. Picture: File cutting costs, improving its cash position and changing its financing mix. The company’s net finance cost, which has in the past weighed down its earnings, fell 75 per cent to Ksh395 million ($4.54 million) in 2013, from Ksh1.5 billion ($17.24 million) the previous year. The oil marketer’s operating expenses declined by 7.1 per cent to Ksh4.3 billion ($49.4 million) as a result of a settlement of Ksh535 million ($6 million) that it paid in a case relating to the collapse of Triton Petroleum. Normalised operating expenses rose just five per cent over the year. EA’s insu≥ance indust≥y on a consolidation d≥ive Consolidation is the name of the game in East Africa’s insurance industry. Last week Reuters quoted South African insurer Sanlam saying it would increase its stake in NSE-listed PanAfrican Insurance Holdings. The South African unit also said it was angling to buy one or two other units in East Africa. The announcement came just a week after San- lam said it had closed a deal to acquire a 50.3 per cent stake in Niko Uganda as part of a deal that saw it acquire a 49 per cent stake in Niko Group’s insurance business in Uganda, Malawi, Tanzania and Zambia. Also last week, Saham, the Moroccan invest- ment company, said it had received regulatory approvals from Kigali to buy 66.7 per cent of Rwandan insurance firm Corar SA for an undisclosed amount. In February, South African unit trust MMI Holdings announced it had bought a majority stake in Kenyan insurer Cannon Assurance for $27 million. Britam, the NSE-listed insurer, early this year bought a 99 per cent stake in Kenya’s Real insurance, which has operations in Kenya, Malawi, Mozambique and Tanzania. Tough new regulations introduced by authorities coupled with a thirst for expansion are driving the consolidation. For example, in 2009, the Rwandan regulator introduced new capital requirements that raised the capital and solvency requirements of insurance companies from Rwf100 million ($0.49 million) to Rwf1 billion ($1.49 million), and Rwf0.5 billion ($0.72 million) for short term business. In Uganda, the regulator has increased the minimum paid-up capital requirements from Ush1 million ($385) for all covers, to Ush4 billion ($1.5 million) for non-life insurance and Ush3 billion ($1.15 million) for life. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Tanzania’s inflation on the ≥ise TANZANIA’S INFLATION rose to 6.1 per cent in March, from 6 per cent in February, the National Bureau of Statistics said last week. This is above the government target of a reduction of five per cent. The rise was driven by an in- crease in the prices of food, including rice, beans, vegetables and fish as well as some commodities such as fuel. The food and non-alcoholic beverages inflation rate increased to 7.9 per cent in March, from 6.9 per cent in February. Analysts have said that the country’s inflation rate remains vulnerable on account of an increase in power tariffs, and increased diesel and petrol prices. In January, Tanzania’s Energy and Water Utilities Regulatory Authority announced a 40 per cent increase in electricity tariffs. In Kenya, the rate of inflation dropped to an eight-month low in March, to stand at 6.27 per cent, the first time the cost of living measure has reverted to levels prior to the introduction of VAT in September.
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