Triton saga eats into Total Kenya earnings

By Macharia Kamau and Nicholas Waitathu

Nairobi, Kenya: Total Kenya has reported a Sh64.3 million loss before tax for the year ended December 2012, down from pre-tax profit of Sh57.8 million registered in 2011.

The firm attributed the loss to a settlement that it expects to make with an expected loss of a suit filed against it in a London court. The factoring of the settlement in its 2012 accounts saw the operating expenses go up to Sh4.65 billion in 2012, up from Sh3.96 billion in 2011.

Total said the operating expenses for the year had been controlled and the firm would have reported a profit, but the settlement costs and inflationary trend during the year under review helped wipe out the firm’s earnings.

At the same time, Eveready East Africa is back on profit path after years of registering losses. 

The company, which for long has been fighting counterfeit goods flooding the local market from cheap imports from Asian countries mainly China recorded a 177 per cent growth in its profit before tax. 

The 46-year old company recorded Sh73 million pre-tax profit for the 2012 financial year, an increase of 177 per cent compared to a loss of Sh173 million returned in 2011.

Total is being sued by Glencore – an Anglo-Swiss commodity trading multinational – in relation to activities of the collapsed oil firm, Triton, which in late 2008 illegally moved fuel products worth over Sh7 billion, leaving financiers and oil marketing arms in trouble.

“Operating expenses increased by 17 per cent (Sh690 million) due to the impact of inflation on overheads and a settlement of a legal case that had been brought against the company by a London court, which was exceptional and crystallised after year end,” said Total Kenya Managing Director Alexis Vovk in a statement to shareholders yesterday.

“Without the exceptional settlement, the operating expenses were reasonably controlled and increased by less than the rate of inflation. Recognising the exceptional nature of the settlement that affected the results and the strong balance sheet, the directors are recommending a first and final dividend of 20 cents per share for the year ending December 31.” If approved by the shareholders at an annual general meeting slated for June 12, the dividend will be paid to shareholders by June 13.

Even after posting the good results, Eveready will still not pay final dividend to shareholders and instead will retain its earnings to invest in growing its business and improving the firm’s working capital position.

Jackson Mutua, the firm’s Managing Director attributes the good performance during the year under review to an ambitious reform programme the company initiated early last year.

Mutua said the registered progress was propelled by stabilisation of revenues through the stemming of the decline witnessed in prior years and cost cutting actions resulting to improved gross margin performance by four per cent. 

Also a key factor that helped lift earnings include unrealised exchange gain of Sh51 million, which offset an almost equivalent value in financing cost. He added that the company performed well against a tight economic and market condition over the past year.