Capital Gain

Sanlam issues profit warning on Covid-19 challenges

Published: in BUSINESS, by .


Companies

Sanlam issues profit warning on Covid-19 challenges


TUMBO

Sanlam Kenya CEO Patrick Tumbo. FILE PHOTO | NMG

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Summary

  • Sanlam Kenya has issued a profit warning for the year ended December, citing negative currency movements and the impact of the Covid-19 pandemic on the value of its assets.
  • The Nairobi Securities Exchange-listed firm had already made a net loss of Sh99.1 million in the half-year ended June on the back of higher expenses and payouts of policyholder benefits.
  • The insurer had posted a net profit of Sh114.3 million in the previous year ended December 2019.

Sanlam Kenya has issued a profit warning for the year ended December, citing negative currency movements and the impact of the Covid-19 pandemic on the value of its assets.

The Nairobi Securities Exchange-listed firm had already made a net loss of Sh99.1 million in the half year ended June on the back of higher expenses and payouts of policyholder benefits.

The insurer had posted a net profit of Sh114.3 million in the previous year ended December 2019.

“Based on our unaudited end of year financial results and information currently at the board’s disposal, we wish to report that our projected net earnings after tax for the period ended December 31, 2020 will reflect a decline compared to the prior year earnings,” Sanlam said in a notice.

“… due to the effects of Covid-19 pandemic on the local economy and foreign exchange rates which had an adverse impact on the valuation of the group’s net assets.”

Companies are required by law to issue profit warnings at least 24 hours before they publish full year results which show that their earnings have dropped by a quarter or more compared to the prior year.

The Capital Markets Authority (CMA), however, encourages listed firms to issue such notices as soon as their managers become aware of the likely drop in profits. Such announcements are meant to give existing and prospective shareholders a guide to a company’s performance well in advance of what would otherwise be shocking results.

Sanlam is among more than 15 NSE-listed firms that have issued profit warnings, mostly due to the economic fallout from the pandemic.

“In response to the challenging operating environment, the board of directors applied its focus on innovation and cost savings,” the insurer said.



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