Financial services provider, UAP Holdings, is expected to report at least Sh300 million drop in earnings in the current financial year, on the back of a bearish securities exchange and retrenchment costs.
In a profit warning issued on Monday, the firm forecast its financial results for the year ending December 31, 2018, will be much lower than expected.
This comes a few weeks after the firm completed a restructuring process to unlock efficiencies in the business.
“The board brings to the attention of the public that the earnings for the current financial year are expected to be lower by at least 25 per cent than the earnings reported for the same period in 2017,” said the firm in a profit warning yesterday.
“Investment income has been negatively impacted by the poor performance of the equities market in the second half of the year and the impact of adverse valuations on our properties in Kenya and South Sudan due to lower than expected rental yields and occupancy respectively,” said the statement in part.
Since January 2018, the NSE-20 Share index, NSE-25 Share index and All-Share index (NASI) have all fallen 22 per cent, 11.1 per cent and 11.9 per cent respectively.
Increase take
The profit warning comes a few months after South African-based Old Mutual received approval to increase its stake in the company to 66.7 per cent, up from 60.7 per cent.
Old Mutual, however, confirmed that it does not intend to make a takeover offer and applied for an exemption for complying with the takeover regulations.
Earlier this year, the firm announced it was laying off 89 staff in a re-organisation exercise that would cost more than Sh300 million.
“During the year, management proactively carried out a staff re-organisation in order to unlock efficiencies in the business,” explains the profit warning in part.
“The lower profit after tax in 2018 is partly driven by the related one-off redundancy cost. The full benefit of the cost savings from the re-organisation will be achieved in 2019.”
Old Mutual deals in investment, savings, insurance, and banking.
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