Total Energies Kenya has reported a 55 per cent drop in earnings for the half year ended June 30 attributed to the high cost of crude oil globally and a weak shilling.
The oil marketer posted a Sh795.5million net profit in the period down from Sh1.7 billion posted in the same period in 2021. The weak shrilling resulted in an increase in foreign exchange loss for the company to Sh48 million compared to Sh2.8 million in 2021.
The Kenya shilling traded at 118.53 to the dollar in June, compared to 113.58 in January 2022 and 107.82 in June last year. Crude oil prices on the other hand rose to an average of $109.68 (Sh13,151) in July from $82.03 (Sh9,844) per barrel in January and $63.35 (Sh7,602) in June last year. With the increased cost of crude, the government has been subsiding fuel prices since April last year whereby oil marketers forego their margins at the pump to keep prices low.
Even so, the process has been marked with delays and has seen marketers have to look for alternative financing to meet daily expenses. With the absence of speedy refunds from the government, Total said it had to borrow more over the six months to fund its operations, resulting in a spike in its finance costs that rose to Sh149 million from Sh6 million in H1 2021.
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“During the period, international oil and gas prices, while being volatile, have continued to rise due to market disruptions linked to geopolitical conflicts. These have exacerbated the upward trend of fuel prices as well as working capital requirements of the company,” said the firm’s MD Eric Fanchini in a statement.
Despite the dip in profit, net sales grew by 34 per cent in the period to Sh46.2billion from Sh34.3billion majorly attributed to sales performance and the increased fuel prices.
Fuel prices have remained unchanged in the country for the past two months with a litre of Petrol retailing at Sh159.12, Kerosene at Sh127.9 4, and diesel at Sh140.
Owing to the regulated pricing of petroleum products, oil marketers cannot adjust prices immediately they start feeling the heat from higher global prices as they waiting for the Energy and Petroleum Regulatory Authority(EPRA) to publish maximum prices every month.
The Company’s cash flow position also remained strong given the effective management of working capital The firm’s board of directors did not recommend the payment of an interim dividend for the period.
SOURCE: Capital business
