Bloomberg News

Centum of Kenya Profit Drops 6.3%; Increases Cash Holdings

November 09, 2011

(Updates with closing prices in last paragraph.)

Nov. 9 (Bloomberg) -- Centum Investment Co., Kenya’s largest investment company, said profit declined 6.3 percent in the first half as share prices in the East African nation fell.

Net income dropped to 793 million shillings ($8 million) in the six months through September from 846 million shillings a year earlier, Chief Executive Officer James Mworia told reporters today in Nairobi.

“We increased our cash holdings from zero percent to 11 percent of assets,” Mworia said.

Kenya’s benchmark NSE 20 Index of stocks, sub-Saharan Africa’s worst performer after Uganda’s gauge this year, retreated 16 percent in the six months through September. Centum cut its equity holdings to 9 percent of total assets from 24 percent, the company said in a statement.

“It would have been worse if they had maintained their portfolio in equities,” Renaldo d’Souza, a research analyst with Genghis Capital Ltd., said by phone from Nairobi. “It is actually not a bad result considering the macroeconomic environment.”

Kenya’s economy contracted a seasonally adjusted 4.6 percent in the second quarter, compared with a 2 percent expansion three months earlier, the country’s statistics agency said on Sept. 29. The central bank on Nov. 1 raised the key lending rate by 5.5 percentage points to a record 16.5 percent to curb inflation, which quickened for a 12th month to 18.9 percent in October, almost quadruple the 5 percent target.

Stocks to Improve

The performance of the Nairobi Securities Exchange is likely to improve as interest rates start falling, Mworia said.

Centum is in talks with commercial banks to raise 6 billion shillings to develop the first phase of a real-estate project comprising offices, residential apartments, hotels, shopping malls and recreational facilities on a 100-acre property located along Limuru Road in Nairobi, Mworia said. Phase 1 will consist of about 100,000 square meters (1.1 million square feet), he said.

The total cost of the first phase, which will begin in 2012 and take two years, is 10.8 billion shillings, with about 4.8 billion shillings to be from equity financing, Mworia said.

Centum’s stock rose for a third day, jumping 2.8 percent to close at 16.35 shillings in Nairobi.

--Editor: Gordon Bell, Dulue Mbachu.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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