MONEY MATTERS: Notable Events This Week

 Uchumi posts a half year loss of KES 262m

- Co-op pushes for 60pc pie to banking agents

- CBK backs cheap oil imports to shore up shilling

- Cement, steel manufacturers cut retail prices

Uchumi posts a half year loss of KES 262m-Uchumi posted a half year loss of KES 262.3m in 1H15 compared to a net profit of KES 106.9m in 1H14 attributable to lower sales, high operational costs and increased competition. Revenue declined by 6.3% to KES 6.8bn while operating expenses increased by 10% to KES 1.7bn. Finance costs doubled to KES 60m as the retailer continued servicing the loans incurred to support expansion. The results come after Uchumi raised KES 895.8m through a rights issue last year, an offer that was oversubscribed by 85%. The retailer is banking on the proceeds to boost cash flow, pay suppliers on time, refurbish its existing outlets and fund expansion. So far, two branches were opened in Tanzania in 1H15 bringing total network in Tanzania to 5. Uchumi currently has 37 outlets across East Africa. (Source: Daily Nation)

Co-op pushes for 60pc pie to banking agents- Cooperative Bank has dropped the KES 20 charged on deposits made via an agent and KES 50 charged on rent and school fees payments as it seeks to push 60% of its transactions to agencies and mobile money platform to reduce costs. Management has stated that the use of agencies and mobile money would free staff time enabling more personal attention to customers as customer numbers inside banking halls reduce. Additionally, the maximum daily amount that can be withdrawn via the ATMs has been doubled to KES 40,000.The lender aims to have the bulk of transactions conducted through ATMs, agencies and mobile banking platform. (Source: Business Daily)

 

CBK backs cheap oil imports to shore up shilling-Central Bank of Kenya (CBK) has discounted predictions that the shilling will lose against the dollar, citing reduced import bill to contradict market analysts. CBK said it is basing forecast of a stronger local currency on the dropping fuel prices that should result in a lower import bill. In a statement posted on its website, the financial market regulator stated that the Kenya shilling depreciation against the US dollar has been gradual and has now stabilized with a bias towards strengthening or appreciation. The shilling traded at 91.4 to the dollar, a marginal decline from the previous day of 91.36. CBK is also relying on high foreign currency reserves arising from cash received in the two sovereign bond sales made last year in addition to the KES 63bn precautionary loan from IMF that will be used to defend the shilling in case of any external or internal shocks. Analysts however have been betting on a weak shilling owing to low dollar inflows from the conventional foreign exchange earners—tourism and agriculture. (Source: Business Daily)

 

Cement, steel manufacturers cut retail prices- Steel and cement manufacturers have joined food processors and long distance buses in cutting prices as pressure mounts on other producers to transfer benefit of dropping energy prices to consumers. National Cement has cut the ex-factory price of its Simba brand by KES 25 to KES 575 per 50kg bag – retail prices vary depending on the location due transport cost component. Steel, critical for supporting structures, is priced 11.2 per cent lower at KES 64,865 (USD 710) per tonne. The reduction was as a result of lower electricity costs since October giving the cement maker room to reduce the prices. Electricity tariff for industrial consumers has declined by about 30% in the six month period. Fuel surcharge, eased by the injection of 280MW of geothermal power to the grid between August and December, has dropped from KES 7.22 per kilowatt hour (kWh) in July to KES 2.51 this month. The lower prices of the building materials bode well for property developers and the government which is undertaking or planning to build key infrastructure development projects including a 10,000km road network and Lamu Port and South Sudan Ethiopia Transport (Lapsset) Corridor. (Source: Business Daily)

Equity trading expectations

-Demand on banking counters ahead of full year results release.

-Demand on Safaricom. Touched a high of KES 15.50 last week.

-Activity on Uchumi following 1H15 results release.