Adopting the KK strategy of moving into high value products? Nothing else can explain that decline in the revenue by close to 30%.

The flat gross profit (GP) truly proves that the petroleum retailing business in Kenya is not a volume business anymore but a high value/margin product driven business. The GP game is no longer a "pile them high and sell it cheap" game but a strategic selling game. Plus the cost of sales has been fixed by the government thanks to price controls and a government controlled bulk buying procurement process.

The PBT game on the other hand is a pure finance and strategy play with sales and marketing being relegated to the back-bench.

Profits will determined at the financing level - cost of credit, risk management (forex, hedges, pricing and volume forecasts) and operational efficiency (inventory management,lean structures, bulk storage facilities, IT platforms etc).

Tough times ahead as the "sales game" is easier to play than the "finance game".

Ohana once asked. What's the point of having the highest market share, but making losses. Margins!!. Therein lies your answer.

I foretold this in 2013. In a margin business it is all about the margins

As oil gets clobbered to pulp, oil stocks will struggle to stay afloat. I expect Total and ADSS to keep sliding, but KK may just stay afloat. So the oil sector hedge is KK for those targeting NSE oil stocks.

As interest rates rise, KK is reducing its borrowings.

According to Management during the 1H briefing & interviews:
- No open USD loan positions i.e. 'natural' hedges on USD loans. Huge benefit for KK as KES has cratered against USD since 30th June.
- KES loans being reduced as soon as possible.
- Inventories being tightly managed to reduce Working Capital requirements.
- All acquisitions have to be funded in LCY by the 'local' subsidiary. The HO is not funding any subsidiaries.
- Volumes are up for the retail network but a reduction in volumes in the low-margin sectors has hurt overall market share. Nevertheless, the reduction in overall market share has not impacted profits. Bidding for OTS cargoes at fair prices has reduced winning bids.
- KK was 'short' fuel while prices were falling i.e. as prices fell KK did not have expensive stocks.
- BP/Castrol deal will boost KK's market share in oils and lubricants.

Like @Aguy, I am bullish on KK despite all the drama in the economy.

That Nigeria Madam seemed clueless compared to the good job the KK MD was doing.

And why are African been replaced by Frenchies? The chairman Molapo gone, replaced by a Frenchman, then the CEO Eze gone replaced by a Frenchwoman. The Board and the management looks like Arsenal F.C at the dawn of the millennium.

Did you read about the EABL guy who kula'd 240mn? Aristide Nkoumondo, a Cameroonian
http://www.businessdaily...36/-/y8s7tx/-/index.html

kindly bee keen to review all the facts of the eabl case before maligning anyone.