Kenya’s TransCentury Ltd. said its full-year profits would be down a quarter from last year due to a fair value loss from the sale of its stake in a railway company.
The company said in a statement its sale of a 34 percent stake in Rift Valley Railways (RVR) would erode its profit after tax by 25 percent for the year to the end of December.
TransCentury said its pretax profit for 2013 fell 30 percent to 856.6 million shillings ($9.86 million). Profit after tax was 626.4 million.
“In this market, lower earnings almost always coincides with a decline in share price. We have the lower-than-expected 2013 profits and also the profit warnings,” Gachichio said.
The company, which runs an electricity equipment maker and an engineering services firm active in the nascent petroleum and mining sectors in Kenya, sold its 34 percent stake in RVR to Egyptian private equity firm Citadel Capital in March.
The $43.7 million received from the sale meant TransCentury had recovered its entire cash investment in RVR, but the proceeds were below the historical fair value of the investment. The cash would be re-invested in the business, the firm said.
RVR, operator of the sole rail line linking Kenya’s Indian Ocean coast with Uganda, is set to face competition from a new railway in the coming years after the Kenyan government broke ground on building a standard-gauge line from the port city of Mombasa to the Ugandan border in November last year. (Reuters)