Listed logistics firm Express Kenya Limited has issued a profit warning for the year ending this month on slowed economic activities in the country which it says have significantly reduced demand for warehousing operations.
Coming just a day after another listed firm, Kakuzi Plc, issued a similar statement, the notice by Express Kenya brings to 12 the growing list of publicly traded companies that have issued earnings alerts to investors this year. A majority of them are citing a tough operating environment that includes the high cost of doing business.
Others that have issued the warnings since March include Sameer Africa, Crown Paints, WPP Scangroup, Longhorn Publishers, Sasini, Car & General, Nation Media Group, Centum Investment Company, Unga Group and Kenya Power.
Just like Kakuzi, Express projects that its earnings for the current financial year will be at least 25 percent lower than the income posted last year.
This means that its earnings for 2023 will not surpass Sh56.1 million, having reported a net income of Sh74.8 million last year.
“The warehousing operations of the company are still significantly low due to the decrease in demand and low economic activities leading to reduced income, further resulting to a negative impact on the business performance,” said the firm in a Thursday notice.
“Based on a review of the company’s financial performance, the board of directors has determined that the earnings for the financial year ending December 31, 2023 are projected to be lower than the earnings for the previous year by at least 25 percent.”
Last year, Express Kenya reversed a Sh82.9 million net loss that it had posted in the year ending December 2021.
Kakuzi, on the other hand, projected in a Wednesday statement a decline of at least 25 percent in net earnings from the Sh845.8 million profit posted last year, meaning the figure for this year will not exceed Sh634.4 million.
The agricultural firm attributed the forecast to expected losses arising from a significant decline in demand and price of macadamia on the global markets of China, Japan and the US.
“The anticipated drop in full year net earnings is mainly as a result of our macadamia business which is expected to post a loss due to a significant decline in demand and price in the global markets. However, our other crops are performing as per expectations with a strong performance expected from avocado,” said Kakuzi.
Last year, the firm declared a record dividend of Sh24 per share or a total of Sh470.3 million for the year ended December 2022, after its net income more than doubled from the Sh319.7 million posted in the year ended December 2021.
The payout marked a nine percent increase from the Sh22 per share amounting to Sh431.1 million that was paid for 2021.
The improved earnings were attributed to rising demand for commodities on recovery from the Covid-19 pandemic, as well as the weakening of the local shilling against major world currencies such as the US dollar.
In March this year, Kakuzi announced plans to grow avocado exports to the Chinese market that it said has the potential to become one of the largest destinations for the Kenyan fruit.