The Star
By James Waithaka
Crown Paints has disclosed its profitability will decline by more than a quarter for the year ended December 31, making it the third NSE-listed company to issue a profit warning this week.
The first was TPS Serena, a hospitality-focused company associated with the Aga Khan, which on Tuesday cited "a challenging business landscape" as the cause for the profit dip, as tourism slumped across East Africa.
On Wednesday, Pan African Insurance Holdings warned its profit will decline by at least 25 per cent, blaming under-performance in stocks investments and property sales.
"Equity market returns and profit from property sales are more volatile in nature and large variances between financial years are expected," John Simba, the chairman, said in a notice.
Pan African Insurance is owned by South African financial services firm Sanlam Group.
Crown Paints on the other hand said profits have been hurt by its operations across East Africa. It manufactures the Regal Paints brand in Uganda, and has depots in Tanzania and Rwanda. The firm is also eyeing entry into the Ethiopia and South Sudan markets.
A 25 per cent decline means it will report a net profit of Sh160.38 million at most for 2014, down from Sh213.84 million in the previous year.
"This drop in full year earnings is as a result of very challenging market dynamics for subsidiaries in our expansion programme within the region," company secretary Conrad Nyukuri said in a statement to the Nairobi Securities Exchange yesterday.
Last week, the paint maker said it will invest $2.5 million (Sh228.40 million) in Kigali operations over the next five years with an eye on the Central African market.
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