Kenya Power recorded a Ksh30 billion net profit for the year ended 30th June 2024, a marking a dramatic return to profitability backed by increased sales and a strong shilling that reduced its costs. This is a turnaround from a net loss of Ksh3.19 billion net loss for the year ended June 2023.
The improved profitability was mainly supported by growth in revenue from electricity sales as well as decreased finance costs due to the strengthening of the Kenya Shilling against major global currencies. During the year, electricity sales increased by 21% to Ksh231.12 billion from Ksh190.98 billion recorded during the previous trading year.
This growth is attributable to improved sales primarily from the 447,251 new customers connected to the grid during the year, as well as increased economic activities, particularly in the manufacturing sector. Commercial and industrial, as well as domestic customer categories, recorded the highest growth in sales at 5.1% and 5.5%, respectively.
Finance costs decreased by Ksh24.84 billion, primarily driven by unrealised foreign exchange gain of Ksh7.88 billion, compared to a loss Ksh16.87 billion in the previous period resulting from loan revaluations. This gain was due to the appreciation of the Kenyan shilling against the US Dollar and Euro, both of which represent approximately 90% of the company’s loan portfolio.
The power purchase cost increased from Ksh143.58 billion the previous year to Ksh150.61 billion. This growth was driven by additional units purchased to support rising demand, as well as the high exchange rate that prevailed earlier in the financial year.
“While the company’s revenues are denominated entirely in Kenya shillings, power purchases are predominantly paid in foreign currencies. As a result, the strengthening of the shilling in the second half of the year led to an increase in cost of sales that was lower than the growth in revenue, thus contributing to the higher gross margin,” said Kenya Power Managing Director and CEO, Dr. (Eng.) Joseph Siror.
Similarly, the operating expenses rose to Ksh46.28 billion from Ksh37.28 billion in the previous year. “This increase is attributed to a 92% rise in wheeling charges for the expanding transmission network and the recruitment of additional technical staff to support business operations. Through careful cost management and zero-based budgeting, we aim to maintain stable margins despite inflationary pressures,” said Dr (Eng.) Siror.
To sustain the profitability, in the medium term, Kenya Power has identified priority areas that will guide its business operations while consistently delivering value to its shareholders. The strategic focus areas include financial sustainability, operational excellence, customer centricity and strengthening of human capital.
“Our focus will be implementing high-impact projects and initiatives detailed in our Strategic Plan, ensuring that they are fully resourced as we cultivate a culture of operational excellence within our workforce. By empowering our teams and achieving meaningful outcomes, we aim to build a prosperous future that benefits all stakeholders connected to our mission,” said Dr. (Eng.) Siror.
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