Carbacid Investments reported a 19 per cent growth in profit to Sh1 billion compared to Sh843 million profit it reported in the prior year driven lower costs and improved performance of listed equity investments. The company registered robust performance despite facing higher royalty payments payable to the Ministry of Mining and Blue Economy.
The board chair, Dennis Awori, told investors on the latest annual report:
“Despite a sharp increase in the cost of doing business, driven primarily by the significant higher royalties payable to the Ministry of Mining & Blue Economy, as well as rising labour expenses, fleet maintenance, and fuel costs in the last quarter, the Group still delivered a robust performance.”
The company’s sales improved by 1.6 per cent to Sh2.1 billion from Sh2.07 billion, driven by rising demand from export markets in South Africa, Namibia, Botswana, Zimbabwe and Malawi. However, stronger shilling against the US dollar muted the growth from export sales.
Sales in Kenya grew 22 per cent to Sh613 million constituting 40 per cent of total revenue this year, up from 24 per cent last year. Export sales dropped marginally to Sh.1.49 billion.
The carbon dioxide manufacturer, whose product is mainly used by alcoholic and non-alcoholic beverage manufacturers, saw its earnings from sale of carbon dioxide drop by 2% to Sh1.31 billion while transport revenue was up 8.3 per cent to Sh785 million.
Operational efficiency, particularly from lower power costs after significant investment in solar energy infrastructure, saw the company lift its gross margins to 65 per cent from 59 per cent.
The NSE-listed firm said it plans to expand the solar infrastructure with plans to commission a further 750 KWp solar plant in the financial year 2025-2026 in line with the company’s strategy to use sustainable energy and reduce reliance on grid power.
Despite the cost benefits of operational efficiency, Carbacid Investment’s board chair, Dennis Awori, warned the company is facing headwinds that are expected to negatively impact the operating margins of the company
The board chair, Dennis Awori, on the cost headwinds facing the company:
“There are headwinds that will have to be carefully managed in the current year. The cost of higher royalty payments, combined with persistent inflationary pressures on labour, energy, and fleet costs, is expected to put a strain on operating margins.”
“Unless there is meaningful policy review or relief on royalties by the Ministry, these costs will pose a competitive disadvantage to Kenya’s exports of liquified carbon dioxide.”
Improved performance at the Nairobi and Dar es Salaam stock exchanges positively impacted the group’s investment portfolio, resulting in an unrealized gain of Sh120 million from equity investments and a 95% increase in dividend income.
The board chair, Dennis Awori, on improved performance of equity investments:
“The Nairobi Securities Exchange (NSE) and Dar-es-Salaam Stock Exchange (DSE) continued their recovery, positively affecting the company’s investment portfolio. This led to unrealized gains of Sh68 million in NSE-listed stocks and Sh52 million in DSE stocks.”
“Additionally, dividend income rose sharply by 95% compared to the previous year.”
The company updated investors on the acquisition of BOC Kenya:
“After years of delays at the Capital Markets Authority Tribunal, the appeal filed by a shareholder of BOC Kenya Plc was dismissed by the Capital Markets Tribunal for lack of merit on the 29 August 2024, and in turn the suspension of the Offer was lifted allowing for completion.”
“However, after carefully evaluating the proposed transaction in the current circumstances, Carbacid ultimately decided not to progress with its offer to acquire BOC Kenya.”
The company proposed a final dividend of Sh2.00 per share subject to approval by shareholders at the Annual General Meeting, which is scheduled to be held virtually on 18th December 2025.
