14 November 2012

Kenya: Blue-Chip Firms Keep Wage Bills Low to Protect Profits

Blue chip public companies listed at the Nairobi Securities Exchange have contained their wage bills at manageable levels to avoid eroding gains in revenues made.

A number of those that have recently announced their results, show either a marginal climb or reduction in their staff costs. KCB in its third quarter results saw a minimal 1.2 per cent rise in its wage bill. This was from Sh8.76 billion to Sh8.86 billion in the first nine months of the year.

For the bank which has traditionally had one of the highest employee bill, the staff costs made 48.9 per cent of its total operating costs of Sh18.11 billion compared to 53.5 per cent of the 16.37 billion operating expenses in the same period previous year.

The bank seems to be reaping the benefits of the management restructure exercise that it finanlised mid-last year . Kengen in its full year results reported a 24 per cent drop in its wage bill. This reduced from Sh2.89billion to Sh2.17 billion. The power generator operating expenses stood at Sh10.266billion.

Equity Banks staff costs notably shot up by 44 per cent in the third quarter to Sh5.89 billion from Sh4.10 but with a good reason given. "This was due to recruitment of additional senior managers and new employees for the subsidiaries in Tanzania and Rwanda," said James Mwangi, the bank CEO.

The wage bill made 43 per cent of its Sh13.39 operating costs. Mwangi said the bank will not be employing new staff soon. Safaricom which reported its half-year last week but said it only releases staff costs at full year seemed satisfied with its cost levels.

Its total operating costs as a per cent of revenue held constant at 24.6 per cent of total revenue, rising by 12 per cent versus a 19 per cent increase in revenue.

Safaricom CEO Bob Collymore meantioned headcount control would be applied to keep costs down among other saving measures like keeping down the fuel , transmission and IT operational costs.

In 2011 financial year, Safaricom spent Sh5.1 billion in employees as salaries, wages and other benefits ,up from Sh4.4 billion in the year 2010. But not all firms are celebrating their wage levels.

Kenya Airways which reported a Sh6.6billion annual loss last week, recorded a 16.8 per cent rise in employee costs. The salaries hit Sh7.7 billion during the year, a 19.3 per cent of its direct operating costs of Sh39.88 billion.

Its on the back of this increases in staff costs that it is retrenching nearly 600 employees in a process that has cost it Sh826million. It expects benefits of around Sh400million to be accrued from the first year.

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