Umeme cautions shareholders over 60 per cent profit drop

NAIROBI, KENYA: Shareholders of Umeme have been asked to exercise caution while dealing with the shares of the company.

On Monday, Umeme said its profits for the year ended December 31 2020 will decline by more than 60 per cent compared to the year ended December 31 2019.

The reduction in profit is attributed to the effects of the Covid-19 pandemic, regulatory lag, and suspension of the government’s free connection policy.

“Shareholders and potential investors are advised to exercise caution while trading in the Company’s shares,” read a notice in local dailies. “The company is optimistic that the recovery in the business environment as governments respond to the pandemic will support stronger operational and financial performance in the year ahead.

Umeme Limited is Uganda’s main electricity distribution company, listed on the Uganda Securities Exchange and cross listed on the Nairobi Securities Exchange.

In a 2019 report, the company said customers connected to the electricity grid within the Umeme footprint increased by 14 per cent to 1.47 million. Of these 178,152 were financed by the Government and development partners under the Electricity Connections Policy.

Uganda’s installed generation capacity increased in 2019 by 15 per cent to 1,134 MW from 984 MW mainly as a result of the commissioning of Isimba HPP Dam (183 MW). The peak system demand increased from 645.4 MW at the end of 2018 to 723.76 MW as of 31 December 2019.

Electricity sales (GWh) increased by 6 per cent to 3,183 GWh from 3,011 GWh in 2018.

The industrial segment recorded an average growth of 7 per cent in 2019. The growth was in tandem with the general regional economic conditions and deliberate government strategy to further industrial growth.

During the year, Umeme invested Ushs 104 billion in the distribution network, for projects related to growth, supply reliability and loss reduction; and Ushs 185 billion in last-mile connections (under a GoU access program) bringing the total capital investment for 2019 to Ushs 289 billion compared to Ushs 230 billion in 2018.