23 August 2012, Sweetcrude, NAIROBI – FRENCH oil giant, Total’s oil marketing business in Kenya suffered pretax loss in the first half of this year following a surge in financing costs and oil price caps.
But the company said, Thursday it expects easing economic conditions to help it return to profit within the year.
The group, part of French oil major Total, posted a 282.8 million shilling pretax loss in the six months to June 30, against a 145.4 million shilling profit in the same period last year.
Total Kenya said that slowing inflation, a more stable Kenyan shilling and falling interest rates should boost the company in the second half, Reuters reported.
“Thanks to these developments and the implementation of action plans to control costs and develop non-fuel revenues, the management remains optimistic that gains will be realised in the second half of 2012 to bring the company back to profitability,” managing director Alexis Vovk said in a statement.
Kenya’s central bank cut its key benchmark interest rate to 16.5 percent in June, down from the 18 percent it had maintained since December 2011. Inflation also fell to 7.74 percent in July.
Total’s turnover increased by 7.4 percent to 48 billion shillings but financing costs nearly tripled to wipe out the gains, the company said.
Financial expenses increased by 749 million shillings to 1.1 billion shillings, with the company citing high interest rates and increased bank borrowing to finance higher working capital.
Vovk said that the company also suffered from “supply and logistical constraints” within the oil industry in Kenya and that the government oil price cap hurt its results.