Sanlam Kenya Plc has issued a profit warning, anticipating a decline in earnings by at least 25% for the year ending December 31, 2023.
This unexpected drop is attributed to the current high interest rate environment denting the company’s fortunes.
In a statement to shareholders, the company’s board cited increased finance costs due to unrealized losses on government securities held within their portfolio.
“The projected decline in earnings for the year ending 31st December 2023 is due to the prevailing high interest rates leading to increased finance costs and unrealized fair value losses on our portfolio of government securities,” the statement reads.
According to the company, the profit warning announcement is only based on the Management Accounts of the Company and a preliminary assessment made by the Board with reference to the figures and information currently available.
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“The Shareholders of Sanlam Kenya plc and the public are therefore advised to exercise caution when dealing with the shares of the Company,” the statement read in part.
Additionally, the company’s board emphasized their commitment to improving operational efficiency, customer offerings, and ultimately, delivering sustainable returns for investors.
Besides, their efforts focus on innovation, capital efficiency, and digitalization of key business processes.
“The Board of Directors continues to focus on innovation, improving capital efficiency and digitalization of key business processes to improve the company’s operational efficiencies, customer offering, and sustainable shareholder returns,” the statement states.
Sanlam not alone
Sanlam Kenya joined a growing list of companies on the Nairobi Securities Exchange – NSE, which warned investors of looming profit dip.
They include Kakuzi Plc and Express Kenya which projected lower earnings due to a difficult operating climate, among other considerations.
Also Read: Top Kenyan Companies That Have Warned Investors So far and Why
Others are Kenya Power, Unga Plc, Sameer Africa, Crown Paints, and WPP Scangroup, Longhorn Publishers, Sasini, Car & General, Nation Media Group, and Centum Investment Company.
Notably, corporations are obligated by law to provide profit warnings at least 24 hours before publishing full-year results that show a quarter or more reduction in earnings compared to the previous year.
However, the Capital Markets Authority (CMA) urges companies to publish such alerts as soon as their managers become aware of the probable decline in profits.
Such disclosures are intended to provide existing and prospective shareholders with a preview of a company’s performance ahead of otherwise surprising results.
