Four banks among 14 firms in the red as profits hampered in the pandemic year

By Godfrey Were

At least 14 companies have issued profit warnings this year, with most blaming the economic fallout from the Covid-19 pandemic for their weaker earnings.

Britam Holdings , Absa Bank Kenya , East African Breweries Limited (EABL), Kenya Power , East African Cables , Kenya Orchards , Longhorn Publishers , Nairobi Business Ventures , Nation Media Group and Unga Group are among the companies that have warned investors of reduced earnings

Others are NCBA Group , TPS Eastern Africa , I&M Holdings and Standard Chartered Bank Kenya.
Companies are required by law to issue profit warnings at least 24 hours before they publish full year results which show that their earnings have dropped by a quarter or more compared to the prior year.

The Capital Markets Authority (CMA), however, encourages listed firms to issue such notices as soon as their managers become aware of the likely drop in profits.

Such announcements are meant to give existing and prospective shareholders a guide to a company’s performance well in advance of what would otherwise be shocking results.

Kenya suffered vicious financial and emotional stress from the COVID-19 second wave pandemic than other African nations, according to a survey by GeoPoll – which found that the East African nation had the most widespread income cuts of any of the six African nations polled in November.

The survey which looked at Kenya, Nigeria, Ivory Coast, DRC, Mozambique and South Africa found 43 per cent of 3,000 respondents reporting their emotional wellbeing had deteriorated during 2020, with three quarters of respondents in Nairobi alone admitted to having imbalanced emotional health, with most of those citing lack or reduced finances as their main reason for grief.

Financial incomes among the majority of Kenyans have fallen by double digits in March and June with a good number affected by cuts in wages than in the other nations. Around 52 per cent of the respondents across all six nations reported a large drop in earnings since June, but 64 per cent of respondents in Kenya suffered the same.

“South Africa had a lockdown early in the pandemic, but measures there have since eased, and the other nations polled have had fewer long-lasting restrictions.

Only Kenya has had extensive restrictive measures throughout, remaining under curfew for now eight months, and delivering economic cuts that have caused a parallel deterioration in respondents’ emotional wellbeing,” said Roxana Elliott, the Vice President of Marketing for GeoPoll.

Across all six countries, 50 per cent of respondents reported their routines had been changed a lot by the pandemic, but, in Kenya, 66 per cent of respondents reported considerable changes to routines, with only 6 per cent saying their routines had not changed at all.

The survey further found that Kenyans were also more gloomy ahead of the 2022 election year with 56 per cent of those polled expecting economic rebound to take over six months, while 35 per cent said it would take at least 12months for things to improve. About 40 per cent expect it to deteriorate.

“The prolonged disruption of routines in Kenya, combined with a larger second wave of infections than seen in many other countries, and a greater economic impact, have brought a general level of distress and anxiety to the national psyche that is reflecting across people’s attitudes and decisions,” said Roxana.

A total of 604 firms in Kenya sent workers home due to the coronavirus fallout, according to Federation of Kenya Employers (FKE) which said that at least 33 jobs were lost in every modern sector company between March and August.

The Kenya National Bureau of Statistics estimated that around 1.7 million people had been made redundant due to the outbreak.

Another study conducted by SYSPRO is however predicting a near-full economic recovery heading into the December and New Year festivities even though most businesses will be looking to pull back their spending for the near-term.

The Survey polled Chief Financial Officers (CFOs) in the manufacturing companies – showing that out of over 100 manufacturing outfits that responded to the online survey, over 50 per cent of such companies had recovered from the impacts of the pandemic while 30 percent expected to return to pre-pandemic trading conditions by the end of Q2 2021.