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Carbacid posts 3.3 percent profit rise as costs swell
The company supplies the gas to clients in the local market as well as in Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Zambia, South Sudan and Somaliland.
Carbacid Investments has reported a 3.3 percent growth in net profit for the year ended July 2024 to Sh843.2 million, helped by higher demand for carbon dioxide in regional markets.
The Nairobi Securities Exchange (NSE)-listed firm’s turnover grew by 20.1 percent to Sh2.07 billion, but rising expenses ate into the growth of its margins.
The firm’s cost of sales went up by 19.5 percent to Sh846.8 million. Administrative expenses rose 11.3 percent to Sh371 million, while finance costs more than doubled to Sh43 million from Sh16.4 million.
“The growth was primarily driven by growing regional demand for carbon dioxide and entry into new markets. Despite rising costs across the entire supply chain, the business successfully maintained gross margin percentage through cost management initiatives,” said Carbacid in its financial statement.
Carbacid announced an unchanged dividend per share of Sh1.70, translating into a total payout of Sh433.24 million. This dividend will be payable on or about December 18, 2024 to shareholders on the company’s register on November 26.
Carbacid is a major producer of carbon dioxide, which is used to carbonate soft drinks, wine and beer. In solid form, it is used as dry ice in the refrigeration of foodstuffs like ice cream and meat products.
The company supplies the gas to clients in the local market as well as in Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Zambia, South Sudan and Somaliland.
Its sales have been rising over the past four years, reversing a decline seen over the previous decade in the wake of increased competition from alcohol manufacturers who harvest carbon dioxide as a byproduct of their production process.
Carbacid responded to the loss of market share by seeking new regional markets and marketing its gas as a high quality product —pure carbon dioxide sourced from naturally occurring underground reserves.
The company is currently looking to take over fellow listed gases firm BOC Kenya, which sells oxygen to hospitals and other industrial gases that are used in welding, among other applications.
The proposed takeover by Carbacid and its affiliate Aksaya Investments LLP was initiated in November 2020, before being held up by a petition before the Capital Markets Tribunal by former BOC Kenya chairman Ngugi Kiuna, who argued that minority shareholders were disadvantaged by an undervaluation of the company.
The tribunal ruled on the matter on August 29, 2024, dismissing Mr Kiuna’s application on grounds that the transaction complied with the provisions of the Capital Markets Act, and that the decision of whether an offer is fairly priced and whether to accept it is up to shareholders, rather than the regulator.
