November 28, 2019 / 5:37 AM / 11 days ago

UPDATE 2-Kenya's Centum banks on real estate after H1 profit trebles

* H1 pretax profit surges to 7.72 billion shillings

* Driven by private equity, investment businesses

* Sees boost from real estate sales next fiscal year (Adds details, outlook, quotes)

By George Obulutsa

NAIROBI, Nov 28 (Reuters) - Kenya’s Centum Investment Company Plc expects real estate sales and higher income from other investments to lift its earnings in its next financial year, it said on Thursday, after first-half profit trebled.

Centum is closely watched by investors on the Nairobi bourse because it is the only investment company, offering exposure to opportunities like shopping mall developments and listed and unlisted companies in East Africa.

Its pretax profit for the six months to the end of September trebled to 7.72 billion shillings ($76.06 million), boosted by higher income from its private equity and investment businesses.

The company expects to increase the value of its real estate sales in the financial year starting next April by more than 6 billion shillings, said Samuel Kariuki, its chief financial officer.

“We expect a new line of sale of residential units to start playing a significant role in this income statement,” he told investors at a briefing.

Centum’s real estate developments, including shopping malls and homes, span the region from the Kenyan coastal resort of Kilifi to Nairobi and to the capital of neighbouring Uganda, Kampala.

Its developments are usually preceded by market research to establish the level of demand, said James Mworia, Centum’s chief executive.

Its private equity arm posted an operating profit of 8.4 billion shillings, compared with 1.8 billion shillings a year ago, helped by stake sales in two drinks companies — Almasi Beverages and Nairobi Bottlers.

Centum said its “investment and other income” shot up to 12.4 billion shillings from 4.05 billion shillings a year earlier.

Mworia said he expected this to rise further.

“We have higher cash now that has been deployed in fixed income securities that was not there previously,” he said.

“So previously we were probably earning 400 million shillings in dividends. That will be replaced by a higher investment income of about a billion shillings.”

The company said reduced financing costs of about a billion shillings would also help its earnings.

There was little reaction in the shares, which went up 0.50% after the results were released, to 29.90 shillings apiece.

$1 = 101.5000 Kenyan shillings Editing by Duncan Miriri and Mark Potter

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