Kenya’s Uchumi supermarket chain declares its first dividend payment to shareholders in ten years despite a 21.7 percent drop in pre-tax profits, a day before appointing a new chairperson.

The company announced on Tuesday that shareholders are set to receive a dividend payment of 0.30 Kenyan Shillings (KES) ($ 0.0035) per share held; following a ten year “drought”, the last dividend having been paid in 2003.

The supermarket chain, however, also announced a year to June pre-tax profit result of 403 million shillings ($5 million) – a significant drop from last year’s annual result at June of 514 million shillings ($6 million); a 21.7 percent decline over the year.

Uchumi did post an increase in sales results, figures up 28.7 percent, the company achieving sales to the value of 13.9 billion shillings ($163 million).  However, this jump in sales was dampened by an increase in its operating costs to net revenue ratio, the ratio expanding to 19.6 percent.

The Nairobi Securities Exchange (NSE) has seen Uchumi perform as the biggest gainer this year to date, with shares in the supermarket chain growing more than 150 percent so far this year.  On Monday, Uchumi shares spiked by 1.6 percent over the day closing at 19.65 shillings ($0.23); following a rush in investor buying prompted by speculation that the company’s Tuesday announcement would include a dividend payment.

Uchumi currently has 24 branches across the East African region; 19 in Kenya, one in Tanzania, and four in Uganda.  Two of the Kenyan units, the one Tanzanian unit, and three of the Ugandan branches were launched this year – thus the company attributes its high operating costs to net revenue ratio in part to the difficulties inherent in launching the six new branches.

The company is pushing expansion to take back its dominant market position which it lost in a near financial collapse in 2006, caused by 1.2 billion shillings ($14 million) losses prompting the inability to meet debt payments.  Uchumi was removed from the NSE due to the financial fiasco, and was only re-listed in May of this year.  The Kenyan market has now been stolen by rivals Nakumatt and Tuskys, which Uchumi hopes to change over the next few years.

In a related move, a day after declaring its results and dividend payment, Uchumi announced the appointment of its new chairwoman, meeting the demand by the Kenyan regulator – the Capital Markets Authority (CMA) – that the company should select an independent chairman to improve governance in order to prevent repeats of the 2006 financial chaos.

Uchumi announced that Khadija Mire – an ex-Telkom Kenya official – will be taking up the position of chairperson.


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