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KenolKobil eyes property market to perk up its revenues

CARTOON
By | March 1st 2012

By Macharia Kamau

Oil marketer KenolKobil plans to increase investments in areas it termed as low risk and high margin.

These include non-fuels and LPG, where the Government does not regulate prices.

KenolKobil’s chairman and managing director Jacob Segman says the firm will focus on key growth areas – generally referred to as non-fuel.

"Non-fuel is a very attractive line. We think that areas like property development and real estate have a great future especially in the view of economy and also the growth in the sector," said Segman.

"We expect to diversify into developing tracts of land that we own across the region," Segman said.

KenolKobil owns land in the capitals of Ethiopia and Rwanda.

"We are looking at real estate in Ethiopia where we have 20,000 square metres in the heart of Addis Ababa. We also have 10,000 square metres in Kigali that we want to develop."

In Kenya, the firm has ventured into real estate mostly through developing restaurants and convenience stores next to fuel outlets.

Oil marketer KenolKobil reported a 73 per cent increase in pre-tax profits to Sh4.9 billion for the year ended December 31, 2011 up from Sh2.8 billion in 2010. The firm also announced plans to bring on board a strategic partner to help execute what it said would be its next phase of growth into a Pan African company.

Last year’s earnings were on the back of multiple revenue streams that performed well during the year.

The company said its margins went up mainly due to stronger contribution coming from sectors as trading, resell, LPG, lubricants, fuel oil, non-fuels and aviation.

Despite the growth in profitability, the oil dealer was heavily hit by the weakening of shilling after the unit hit all-time low of Sh107 against the dollar in October last year.

KenolKobil firm suffered foreign exchange losses amounting to Sh1.15 billion last year compared to Sh573 million in 2010. Its Kenyan operation also suffered the largest exchange loss at Sh982 million.

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