Kenya Shilling's rebound plugs corporate bleeding

The strengthening of the Kenya shilling last year brought a windfall to many forex-guzzling firms in Kenya, we can report.  It drove two of the largest guzzlers, KPLC and KQ, out of the red and into black.

The rebound that shaved US$900 million off our national debt also wiped between 55 and 67 percent off the books of KPLC and KQ respectively. Consequently, the two firms, which are forex guzzlers, posted huge profits.

 Kenya Airways (KQ), hit a major milestone. It made the largest net profit in its history - KES 5.4 billion (US$42 million) in 2024 from a net loss of KES 23 billion ($143 million) the previous year.

The airline has, since 2014, been a victim of external factors that led to losses: In 2014, it was hit by the Ebola outbreak in West Africa, one of its largest markets that grounded it for nearly a year. Then the whole aviation industry globally was grounded by the COVID-19 outbreak in 2020 for almost a year.

Since then, it has been making losses since it was still meeting its financing costs despite being grounded. It is these costs that the rebound in the shilling wiped out last year.

The appreciation cut its financing costs by 67 percent from KES 33 billion in 2023 to KES 11 billion in 2024.

For Kenya Power and Lighting Corporation, the shilling’s appreciation wiped 55 percent of debts off its books.  Ninety Percent of KPLC’s Power Purchase Agreements are dollar-denominated while she bills her customers in Kenya Shillings. The depreciation had placed quite a strain on her cash flow for she spent more shillings to buy US dollars to pay her debts. Such a mismatch dug a deep hole in her bottom line in 2023, posting a KES 4.4 billion net loss.

However, the shilling’s clawback wiped out the entire financing cost budget line, shrinking from Kshs 24 billion to a gain of KES 686 million in 2024. This catapulted her gross profit to KES43 billion which after taxation earned a net profit of KES 30 billion. That also bought her some bragging rights as in the first half of the current financial year which ended on December 31, 2024, she reported nearly KES 10 billion in profits.

The company reported a further decline in financing costs by KES 13 billion due to the appreciation of the shilling and repayment of outstanding loans. She bragged about paying Government loans that were held in moratorium since 2021.

The appreciation of the shilling was not the only source of profits. In fact, the firms had been making operating profits which were gobbled up by financing costs. However, the shilling’s strength contributed a significant portion of their profits. KPLC for instance in 2023 made KES 19 billion in operating profit which was gobbled up a KES 24 billion in financing costs punching a KES 4.4 billion hole in her bottom line.

Kenya Airways also made an operating profit of KES 10 billion which was gobbled up by finance costs and forex losses of KES 33 billion, leaving a gaping hole of KES 22 billion in the bottom line.

In 2024, both companies made operating profits KEs 16.6 billion for KQ and KPLC posted KES 41 billion on improved business performance. All signs point to better performance in 2025 given their positive outlook concerning business performance. Both report improved demand for their services.

Elsewhere, the usual suspects, the financial sector reporting sterling performance and huge profits. This sector, which is fully indigenized, reported a total rake of  KES 198 billion for the top tier banks Led by KCB group which posted KES62 billion in net profits followed by Equity Bank  Group which reported KES49 billion.

Others in this category are: Co-op Bank Group KES 25 billion; NCBA KES 22 billion; ABSA Group KES 20 billion and StanChart KES 20 billion.