Horrible, from a turn-over of 38 billion to get 145million profit. How long before they walk away. anyway i'm glad i quit oil stocks at the right time.

This is the biggest bullshit excuse Ive ever heard... Kwani is kenol not under price controls..
With kenya still contibuting to more than half of their earnings they should have also been negatively impacted by the price controls..

This firm should just delist and join the eveready pack..

Price Controls are not good for consumers or suppliers since they breed inefficiencies.

As for KK, they face controls in Kenya, Tanzania, Rwanda, Ethiopia [not sure about Uganda, Zambia & Burundi] but it remains very efficient thus can push volumes which lower (per unit) costs across the network.

@m-tupu - Yes, GoK will not address price mechanism as long as it is POLITICALLY convenient... nevertheless, the REGIONAL diversification helps KK which can re-route resources, cash, products to markets that are most profitable.

An example:

In 1Q 2011, the KOSF tanks were full of products from a 'connected' OMC. KK had a ship that could not off-load & attracted HUGE demurrage fees.
KK complained to no avail (while there was a shortage of product across up-country incl Nairobi) so it sent the ship to Dar. Other "Kenya-only" firms would be forced to keep the ship at Mombasa.

I honestly dont know how kk are weathering the prices, they can even afford to give discounts!!!! there are serious genius brains at work over at KENOL KOBIL. Now imagine what they can do when the factors become better.

The company attributed the reduced performance to various challenges facing the oil industry in Kenya, key among them the impact of price controls that were introduced in December 2010. TOTAL also blamed inefficiencies in the fuel supply chain

Sales Volumes were down 13.7% from 493 KMT to 425 KMT. Turnover however was up by 14.7% to Kshs. 44.72 Billion. The rise in Turnover was as a result of an increase in product price due to high international oil prices

TOTAL earned Kshs. 200 Million from the disposal of company assets.

Gross Profit Margin was down

For more analysis, check out my blog

LINK: TOTAL KENYA HALF YEAR 2011 RESULTS ANALYSIS

@m-tupu - Yes, GoK will not address price mechanism as long as it is POLITICALLY convenient... nevertheless, the REGIONAL diversification helps KK which can re-route resources, cash, products to markets that are most profitable.

An example:

In 1Q 2011, the KOSF tanks were full of products from a 'connected' OMC. KK had a ship that could not off-load & attracted HUGE demurrage fees.
KK complained to no avail (while there was a shortage of product across up-country incl Nairobi) so it sent the ship to Dar. Other "Kenya-only" firms would be forced to keep the ship at Mombasa.

I have a feeling KK is killing the competition by price undercutting at the pump(as evidenced by the poor results of Total). This is fairly easy when you monopolise the supply chain from Importation (OTS - KK has won the last 3 monthly tenders in a row), to wholesaling and distributorship and finally to retail. The huge economies of scale can easily kill the competition in especially a very low margin business.

The Ksh 5 discount KK gives for Sundays/K Card holders is almost what a small scale petrol station owner gets as gross profit per liter.....meaning KK is selling its pump (retail) fuel at wholesale price......... how can the rest compete?

They seem to have adopted a very low margin high volume model. This model is supported by the regional diversification strategy and the tendering for country petroleum supplies (i think they call it the Africa trading desk. This ensures that they purchase petroleum in very huge volumes (both for their own outlets and for the over 10 countries they tender/supply).

The other key strategy that seems to be working well is product diversification/product development focus at KK. They seem to be shifting focus more on such high margin areas as LPG , bitumen, lubricants and other non-oil business lines eg renting out shops/space to Pharmacies, Bank ATMs, Food joints etc.

Retail oil business for KK accounts for only 14% of profit.....what does it account for at Total (K) especially based on the huge purchase they did of retail networks?

At this rate, I wouldn't be surprised if Total (K) may decide to go the route of the other Oil multinationals.......

Happy hunting.

Hmmm. Retail only accounts for 14%? Thanks stocksmaster for pointing that out
Total market share dropped...

Horrible numbers from Total Kenya, it all boils down to inventory management, storage facilities and market share that’s were KenolKobil beats Total Kenya as depicted by the invetory/turnover ratio above, the oil industry in Kenya is characterized by low margins and high operational costs such as Transport and inefficient infrastructure such as an old refinery and inadequate storage facilities operated by inefficient and corrupt state companies which result in very thin operating margins (1.1%)

Read more here http://www.contrarianinv...-loses-market-share.html