KenolKobil puts brakes on expansion as it eyes new partner

By WINSLEY MASESE

Oil marketer KenolKobil has embarked on a turnaround strategy to grow its business and exorcise the ghosts of its past.

The firm posted a Sh6.2 billion loss in 2012, after a buyout deal with Puma Energy fell through, and has had a protracted battle with Kenya Petroleum Refinery, all of which have weighed heavily on the firm.

KenolKobil now says it will slow down on expansion, especially through acquisitions, complete the sale of non-profitable assets and concentrate more on non-fuel business lines, which it said have higher returns. It is also looking for a strategic partner, but said it first planned to get the company on sound footing.

James Mathenge, the firm’s chairman, said the company will focus on profitable business segments such as its liquefied petroleum gas, K-Gas, and lubricants.

During the 2013 financial year, the company registered profit after tax of about Sh558 million, attributable to the introduction of cost-effective management strategies and pursuing the three profitable market areas.

“The firm acted on reducing operating cost... besides, we disposed of idle and under-performing assets,” said Mathenge. The company said it is still interested in a strategic partner to help it in its next growth phase. The search for a strategic partner suffered a setback in March last year after the deal collapsed.

“We continue to see a lot of interest from potential strategic partners but want to continue strengthening the company’s performance and not see a repeat of 2012,” said Mathenge.

KenolKobil Ltd has operations in nine other African countries.

Speaking to the Press in Nairobi yesterday after the company’s AGM, Mathenge said they would pursue the same strategy and non-profitable asset portfolios would be sold.

Shareholders approved a dividend of 26.4 per cent of the total profit after tax, according to the company policy, which is a dividend payout of 25-35 per cent after tax profit.

Group Managing Director David Ohana said that the company was currently focusing on growing the business within and not through acquisitions like before.

“Our under-performance in 2012 can be attributed to our rapid growth but we are now focusing on the internal growth of the business,” said Ohana.