2 January 2019

Kenya: Britam in Yet Another Profit Warning for 2018

Nairobi, Kenya — Britam Holdings (Plc) has issued a profit warning for its 2018 financials, saying its earnings are likely to be at least 25 per cent lower than the previous year.

The Nairobi Securities Exchange (NSE) listed firm offers financial products and services in insurance, asset management, property and banking in Kenya, Tanzania, Uganda, Rwanda, South Sudan, Mozambique and Malawi.

In a public notice made through a letter to the NSE, Britam has pegged the impending profit drop to the performance of the stock market which it says has led to reduced returns from equity investments.

The firm has also blamed "the challenging operating environment (business environment) which has adversely affected its business.

"The Board of Directors of Britam Holdings Plc wishes to inform the shareholders of the company, potential investors and the general public, that based on the preliminary assessment of the forecasted financial results of the company for the period December 31, 2018, the earnings of the company for the current financial year are expected to decrease by at least 25 per cent compared to the earnings reported for the same period in 2017," the company said.

The firm reported a net profit of Ksh527.4 million for the year ended December 2017. Its half year net profit for the period ended June 30, 2018 was Ksh1.4 billion.

The management however says the company is making progress in executing its 2016-2020 strategy.

"The board has undertaken a mid-term strategy review in 2018 focusing on improving customer experience and operational efficiencies," it said even as the management remained confident of a better perfomance this year.

"The board and the management are optimistic of a better and more stable operating environment and believe that the business will perform better in 2019," the firm said in the statement released on Wednesday.

Factors seen to affect Britam include investments in HF Group and Equity Group in a year that saw the Nairobi bourse end on a bear run.

NSE lost 17 per cent on market capitalization for the year 2018 to close at Ksh2.1 trillion compared to Ksh2.5 trillion posted in 2017.

HF Group stocks were among the biggest losers in the year that saw more than a third of the listed firms report either profit drops, losses or issuing profit warnings.

The woes at HF group which has been reporting dismal results has pushed Britam to write-off investments on the lenders shares.

Britam follows on the footsteps of its peer-Sanlam Kenya which last year warned that its profit for the similar period( period ending December 31, 2018) would fall 25 per cent lower than the Ksh53.01 million net profit posted the previous year. last year.

A non-bank financial services firm, Sanlam has based its projected fall on earnings to a 100 per cent impairment of financial assets covering corporate bonds investments, placed in prior year periods in local enterprises which are currently facing financial constrains.

Other firms that issued profit warnings last year include Sameer Africa, Bamburi Cement, Deacons East Africa , Kenya Power and Lighting Company(KPLC) and HF Group.

About 23 firms reported losses or a drop in earnings in the year as majority blamed their dismal performance to a "challenging business environment."

Kenya

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