Kenya Electricity Generating Company (KenGen) has announced a 9.2% decline in net profit for the half-year ending December 2023, citing increased foreign exchange losses. The net profit dropped to Sh2.96 billion, down from Sh3.26 billion in the same period of the previous year, despite a 7.8% increase in net revenue to Sh24.7 billion from Sh22.9 billion.
The decline in net earnings is attributed to a 16.4% rise in operating expenses, reaching Sh10.1 billion, and a 25.7% increase in the tax bill to Sh1.87 billion.
Operating expenses surged due to higher plant operating and maintenance costs, influenced by the 11.3% depreciation of the Kenyan shilling against the US dollar during the period.
KenGen explained that the tax expense escalated due to unrealized foreign exchange losses resulting from the depreciation of the Kenyan shilling, which are disallowable for tax purposes. Consequently, the profit after tax saw a 9.2% decrease.
However, KenGen’s finance income increased by 82.4% to Sh1.87 billion from Sh1.03 billion during the review period, partially mitigating the decline in net profit. This growth in finance income was linked to increased returns on cash investments.
Improved rainfall contributed to a 16.1% reduction in reimbursable fuel and water costs to Sh3.8 billion from Sh4.53 billion, owing to increased hydropower generation. KenGen increased hydropower by seven percent while reducing thermal generation by 3.5% to lower fuel spending.
Despite the positive developments, finance costs for KenGen rose by 27.2%, from Sh1.17 billion to Sh1.49 billion, reflecting the increased costs, interest, and other charges associated with borrowing money.
