Sanlam, 12 Other Companies Issue Profit Warnings: "Earnings Will Be At Least 25% Lower"

• Insurance provider Sanlam is the latest company to indicate that its earnings for the year ending December 31, 2023, will be lower by at least 25% compared to the previous year
• The insurer cited existing high interest rates, which resulted in heightened finance costs and government securities losses
• Besides Sanlam, other companies that issued cautionary statements were Kenya Power and Lighting Company (KPLC) and Unga Group

TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Over 10 Kenyan companies have issued profit warnings, signalling economic challenges and potential financial downturns.

These warnings came as businesses navigated the current economic landscape to try and remain afloat.

Why Sanlam's earnings will be lower than 2022

Insurance provider Sanlam is the latest company to indicate that its earnings for the year ending December 31, 2023, will be lower by at least 25% compared to the previous year.

"Based on the current unaudited financial results, the Board of Directors of the Company are of the view that the company’s projected earnings after tax for the year ending December 31, 2023, are at least 25% lower than the earnings after tax reported for the year ended December 31, 2022," Sanlam stated in a notice, as reported by Business Daily.

The insurer cited existing high interest rates, which resulted in heightened finance costs.

Which other companies issued profit warnings?

Besides Sanlam, other companies that issued cautionary statements were Kenya Power and Lighting Company (KPLC), Unga Plc, Sameer Africa, Crown Paints, WPP Scangroup, Longhorn Publishers, Sasini, Car & General, Nation Media Group and Centum Investment Company.

Unga Group projected a 25% drop in profit, citing challenges in the economic environment, accelerated by the free fall of the Kenya shilling against the US dollar.

The group's managing director (MD), Joseph Choge, noted that the most affected business was Unga Limited, whose sales dropped below target, leading to restructuring.

At the same time, KPLC issued a profit warning for the financial year ending June 2023.

KPLC projected a drop of at least 25% in net profit, and according to the year-end results, the utility firm posted a net loss of KSh 3.2 billion.

Elsewhere, WPP Scangroup, a marketing and communication group, projected a 25% drop in profit for the year ending December 31.

The group blamed this on the subdued economic environment, reduced output levels and purchasing power.

The company said it incurred a one-off severance cost of KSh 178 million following its restructuring programme.