Wazua
»
Investor
»
Stocks
»
kenolkobil returns to profit in Q1 2013
Rank: Elder Joined: 2/26/2012 Posts: 15,980
|
To add to the 2 points above 3. Hedging is a gamble, a strategy that has to be mastered, one can hedge to their advantage or disadvantage. Most "financial strategists" in Kenya are accountants(as many wazuan's) and lack dearly in strategy. I agree in part with @selah...but again, Segman is not a bad CEO, I believe he is under pressure. "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
|
|
|
Rank: Chief Joined: 5/31/2011 Posts: 5,121
|
yaani this Segman even borrowed to finance hedging ... smh
|
|
|
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
|
VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:mwekez@ji wrote:#AGM, planned disposal of noncore assets could raise USD 60m (KES 5.1B ) to reduce debt ... if so, this will not conquer the total debt which stood at KES 16.6B in Dec 2012 .... cc@jamani Well, reducing it from 16.6bn to 11.5bn is still a huge plus. You don't pay down your loans only in full. It makes sense to pay down what you can when you can to reduce the overall impact of debt costs. This is unfortunately a show of very poor management skills on Segman's part! They took debt to acquire assets and then they are now selling assets to pay back the same debt! Pretty scary if you ask me... Really? Wow! I had no idea there is a concept of using debt to buy assets. No idea. Zero. Zilch. Sufuri. And to sell these assets at a decent gain to repay debt? Wow! Sacre bleu! Segman must be the first one to do so and whoever buys assets (inventory, land, buildings, shares, etc) at low(er) prices using debt and then sells them at higher prices must be off his rocker. Now I understand why folks were upset when Williamson took on debt, built Williamson House [sold 50% while it was being built] then cashed in by selling the remaining 50% for 450mn. Crazy! Why go through the hassle to make 300mn in Capital Gains? Or that Paul Kinuthia chap who borrowed, built up Nice & Lovely [including buildings, machinery, etc] & then sold it off to L'Oreal for a few billions & used part of it to repay his debt. Crazy chap that! He should have stayed small & debt-free ;-) Or the Murayas who borrow from banks to buy assets [land & buildings] then sell them off at higher prices to repay the debt! Crazy is Sue! *That said, I do not endorse reckless borrowing like KQ has done* Tomorrow ill take a pic of one of those dead Kobil fuel stations here in Uganda.. Refusing to admit Segman has failed in strategy is like saying that he is still the chairman of KK!!  Mark 12:29
Deuteronomy 4:16
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
selah wrote:@VVS even though you raise valid points, I think it is still poor management when a company sells non performing assets to pay a debt.This strategy only benefit the company in the long term but in the short term the company will still have to deal with issues that made it borrow in the 1st place.
Segman has been reckless the losses were mainly his strategic failures. Agreed
KQ is different in that the business is capital intensive and volatile unlike the Oil business,which is predictable.
Let us give KK the benefit of doubt and assume they have seen the error in their ways and are reforming the house for real...are we as investors going to sweep Segman managerial failures under the carpet, especially with the derivatives and just forget?
I think it is still poor management when a company sells non performing assets to pay a debt Really? Why would a prudent manager keep NON-PERFORMING assets on the books? Why not sell that junk car in your driveway for 100,000 & pay down your 18% per annum loan? Please explain your logic to me. And isn't long-term thinking good while addressing/solving short-term problems too? KQ is different in that the business is capital intensive and volatile unlike the Oil business,which is predictable. How right you are! We know oil prices are steady. They do not fluctuate as we have seen since 2007. Or even the 1970s. Not volatile at all. The same applies to forex rates (oil is priced in USD not KShs) which are steady as they go. 82 to 107 to 84 within 3 months is pretty predictable. Who would have not known that? You are right. Unlike the airline industry, the downstream oil industry is not capital intensive. After all, oil only costs $110 per barrel. Add a few more $$$ for transport, insurance, refining, distribution... not capital intensive at all! Who says KK or others should import a shipload at a time. They should import kadogo loads on a daily basis. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
mwekez@ji wrote:@VVS, and others who attended the AGM or are in the know
(i) What are the non-recurring restructuring expenses that will be incurred this year? Is KK laying off? Not mass layoffs. Retirement buy-outs, attrition via retirement/resignations, non-renewal of contracts
(ii) How much is expected to be spent on the restructuring? Not defined (or significant) but most of it provided for via pension contributions over the years.
(iii) What was said regarding NOCK buying out KK? Internal doc of NOCK. On the card for years. No offer made.
(iv) What other striking matters were discussed at the AGM? 2013 is a turnaround year. Lower volumes at higher margins. Kenya is the worst performer.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
@Kausha - Are we related?  KK is selling assets primarily to reduce debt but it is also completing projects in various countries. I figure the cash from the asset sales will be used first to complete the projects [why leave them half-built] & the rest to pay down debt. The 'restructuring costs' are expected to be minimal & save more in future years. A good plan to spend 100/- in 2013 to save 50/- annually for 5 years. Do we like restructuring costs? No. It is a fact of business as technology changes. After ATMs came in many banks laid off tellers whose only 'job' was to dispense cash! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
murchr wrote:To add to the 2 points above
3. Hedging is a gamble, a strategy that has to be mastered, one can hedge to their advantage or disadvantage. Most "financial strategists" in Kenya are accountants(as many wazuan's) and lack dearly in strategy. I agree in part with @selah...but again, Segman is not a bad CEO, I believe he is under pressure. The strategy to go long on forex forwards was a bad idea in hindsight but when the KShs was depreciating DAILY vs the USD during the volatile 82-107 period it can throw off the smartest of folks. The appreciation to 84 was unexpected by many including many importers stuck with expensive dollars. Hedging uncovered is gambling/speculation. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
guru267 wrote:VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:mwekez@ji wrote:#AGM, planned disposal of noncore assets could raise USD 60m (KES 5.1B ) to reduce debt ... if so, this will not conquer the total debt which stood at KES 16.6B in Dec 2012 .... cc@jamani Well, reducing it from 16.6bn to 11.5bn is still a huge plus. You don't pay down your loans only in full. It makes sense to pay down what you can when you can to reduce the overall impact of debt costs. This is unfortunately a show of very poor management skills on Segman's part! They took debt to acquire assets and then they are now selling assets to pay back the same debt! Pretty scary if you ask me... Really? Wow! I had no idea there is a concept of using debt to buy assets. No idea. Zero. Zilch. Sufuri. And to sell these assets at a decent gain to repay debt? Wow! Sacre bleu! Segman must be the first one to do so and whoever buys assets (inventory, land, buildings, shares, etc) at low(er) prices using debt and then sells them at higher prices must be off his rocker. Now I understand why folks were upset when Williamson took on debt, built Williamson House [sold 50% while it was being built] then cashed in by selling the remaining 50% for 450mn. Crazy! Why go through the hassle to make 300mn in Capital Gains? Or that Paul Kinuthia chap who borrowed, built up Nice & Lovely [including buildings, machinery, etc] & then sold it off to L'Oreal for a few billions & used part of it to repay his debt. Crazy chap that! He should have stayed small & debt-free ;-) Or the Murayas who borrow from banks to buy assets [land & buildings] then sell them off at higher prices to repay the debt! Crazy is Sue! *That said, I do not endorse reckless borrowing like KQ has done* Tomorrow ill take a pic of one of those dead Kobil fuel stations here in Uganda.. Refusing to admit Segman has failed in strategy is like saying that he is still the chairman of KK!! Segman did admit that Uganda is a tough market [untaxed imports especially in Eastern UG] with many 'independents' & as much admitted the long uncovered hedging was a bad idea. What all that has to do with criticizing the sale of under/non-performing assets to reduce debt is beyond my comprehension... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
|
VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:mwekez@ji wrote:#AGM, planned disposal of noncore assets could raise USD 60m (KES 5.1B ) to reduce debt ... if so, this will not conquer the total debt which stood at KES 16.6B in Dec 2012 .... cc@jamani Well, reducing it from 16.6bn to 11.5bn is still a huge plus. You don't pay down your loans only in full. It makes sense to pay down what you can when you can to reduce the overall impact of debt costs. This is unfortunately a show of very poor management skills on Segman's part! They took debt to acquire assets and then they are now selling assets to pay back the same debt! Pretty scary if you ask me... Really? Wow! I had no idea there is a concept of using debt to buy assets. No idea. Zero. Zilch. Sufuri. And to sell these assets at a decent gain to repay debt? Wow! Sacre bleu! Segman must be the first one to do so and whoever buys assets (inventory, land, buildings, shares, etc) at low(er) prices using debt and then sells them at higher prices must be off his rocker. Now I understand why folks were upset when Williamson took on debt, built Williamson House [sold 50% while it was being built] then cashed in by selling the remaining 50% for 450mn. Crazy! Why go through the hassle to make 300mn in Capital Gains? Or that Paul Kinuthia chap who borrowed, built up Nice & Lovely [including buildings, machinery, etc] & then sold it off to L'Oreal for a few billions & used part of it to repay his debt. Crazy chap that! He should have stayed small & debt-free ;-) Or the Murayas who borrow from banks to buy assets [land & buildings] then sell them off at higher prices to repay the debt! Crazy is Sue! *That said, I do not endorse reckless borrowing like KQ has done* Tomorrow ill take a pic of one of those dead Kobil fuel stations here in Uganda.. Refusing to admit Segman has failed in strategy is like saying that he is still the chairman of KK!! Segman did admit that Uganda is a tough market [untaxed imports especially in Eastern UG] with many 'independents' & as much admitted the long uncovered hedging was a bad idea. What all that has to do with criticizing the sale of under/non-performing assets to reduce debt is beyond my comprehension... How do assets become non performing?? who acquires these non performing assets?? The deserted Kobil I am referring to is smack in the middle of Kampala right next to a thriving Total station! Only God can explain why it failed!! And there is a big reason why Segman lost chairmanship!! Mark 12:29
Deuteronomy 4:16
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
guru267 wrote:VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:guru267 wrote:VituVingiSana wrote:mwekez@ji wrote:#AGM, planned disposal of noncore assets could raise USD 60m (KES 5.1B ) to reduce debt ... if so, this will not conquer the total debt which stood at KES 16.6B in Dec 2012 .... cc@jamani Well, reducing it from 16.6bn to 11.5bn is still a huge plus. You don't pay down your loans only in full. It makes sense to pay down what you can when you can to reduce the overall impact of debt costs. This is unfortunately a show of very poor management skills on Segman's part! They took debt to acquire assets and then they are now selling assets to pay back the same debt! Pretty scary if you ask me... Really? Wow! I had no idea there is a concept of using debt to buy assets. No idea. Zero. Zilch. Sufuri. And to sell these assets at a decent gain to repay debt? Wow! Sacre bleu! Segman must be the first one to do so and whoever buys assets (inventory, land, buildings, shares, etc) at low(er) prices using debt and then sells them at higher prices must be off his rocker. Now I understand why folks were upset when Williamson took on debt, built Williamson House [sold 50% while it was being built] then cashed in by selling the remaining 50% for 450mn. Crazy! Why go through the hassle to make 300mn in Capital Gains? Or that Paul Kinuthia chap who borrowed, built up Nice & Lovely [including buildings, machinery, etc] & then sold it off to L'Oreal for a few billions & used part of it to repay his debt. Crazy chap that! He should have stayed small & debt-free ;-) Or the Murayas who borrow from banks to buy assets [land & buildings] then sell them off at higher prices to repay the debt! Crazy is Sue! *That said, I do not endorse reckless borrowing like KQ has done* Tomorrow ill take a pic of one of those dead Kobil fuel stations here in Uganda.. Refusing to admit Segman has failed in strategy is like saying that he is still the chairman of KK!! Segman did admit that Uganda is a tough market [untaxed imports especially in Eastern UG] with many 'independents' & as much admitted the long uncovered hedging was a bad idea. What all that has to do with criticizing the sale of under/non-performing assets to reduce debt is beyond my comprehension... How do assets become non performing?? who acquires these non performing assets?? The deserted Kobil I am referring to is smack in the middle of Kampala right next to a thriving Total station! Only God can explain why it failed!! And there is a big reason why Segman lost chairmanship!! Assets can be or become non-performing or under-performing for a host of reasons. A station whose access is cut-off from traffic after a new highway is built. This is common since 'entries' onto a high-speed highway are limited to prevent accidents. KK had a property on Muranga Road which lost direct access to Muranga Road after part of the land was excised to widen the 2-lane road into a 'highway'. As for 'under-performing' that is simple. KK owns petrol stations in areas where the prices of land have shot up to crazy levels. A station making 10mn (net) annually is not as attractive as selling it for 200mn. Assume interest at 15%. 200mn x 15% = 30mn without stress of running a business vs making 10mn. When a 'business' is acquired [as KK did with Shell stations in Ethiopia] one takes all the assets not piecemeal. Many of these Sellers want one buyer not 20 buyers. See examples of Mobil selling to Oil Libya, Caltex to Total, etc. Perhaps the pruning was overdue. In Rwanda & Zambia, KK bought out existing players whose stations may have been too close to each other so it makes sense to have one 'nice' large station than 2 small-ish ones. Sell off one (with a restriction not be used for a petrol station) & expand the remaining one. This is quite common. In some cases, you are forced to dispose of stations so you choose your 'poor performer' to dispose of. Total did that with Caltex stations. On the chairmanship, it was going to happen. He had to choose between CEO or Chairman. The CMA was on their case. And I too prefer the separation of the roles. Where is the pic of the station? Please provide location details with the pics. I'd like to ask KK about it. Thanks. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
|
VituVingiSana wrote:On the chairmanship, it was going to happen. He had to choose between CEO or Chairman. The CMA was on their case. And I too prefer the separation of the roles. @VVS we all know Segman held onto those positions with no intention of letting go even after multiple requests from the CMA and some shareholders.. There is definitely a reason that the board suddenly stopped supporting his unilateral decision making! Failed corporate strategy... Some top class managers still have the support from shareholders and the board to hold the dual role! www.huffingtonpost.com/2...lder-vote_n_3313187.htmlMark 12:29
Deuteronomy 4:16
|
|
|
Rank: Chief Joined: 1/3/2007 Posts: 18,126 Location: Nairobi
|
guru267 wrote:VituVingiSana wrote:On the chairmanship, it was going to happen. He had to choose between CEO or Chairman. The CMA was on their case. And I too prefer the separation of the roles. @VVS we all know Segman held onto those positions with no intention of letting go even after multiple requests from the CMA and some shareholders.. I did not know what you knew coz I am not privy to his inner thoughts just what I read & hear. There is definitely a reason that the board suddenly stopped supporting his unilateral decision making! Failed corporate strategy... Though without the family's support he could not have held onto both roles.Some top class managers still have the support from shareholders and the board to hold the dual role! www.huffingtonpost.com/2...lder-vote_n_3313187.html Actually, there was a huge number of shareholders against JD as both Chairman & CEO but overall he 'won' so he stayed on. Perhaps, for the past 2-3 years Segman had the support of the majority of shareholding like Dimon. Don't forget Dimon made some major blunders notably the London Whale derivatives debacle. I think it was $6bn (and counting) down the tubes. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
|
|
|
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
|
VituVingiSana wrote:Some top class managers still have the support from shareholders and the board to hold the dual role! www.huffingtonpost.com/2...lder-vote_n_3313187.html Actually, there was a huge number of shareholders against JD as both Chairman & CEO but overall he 'won' so he stayed on. Perhaps, for the past 2-3 years Segman had the support of the majority of shareholding like Dimon. Don't forget Dimon made some major blunders notably the London Whale derivatives debacle. I think it was $6bn (and counting) down the tubes. [/quote] @VVS look at JP Morgan's share price during each scandal/crisis and how quick JD solved each of them.. You will understand why he is one of the few bankers still standing let alone holding the dual role!! Segman should borrow a leaf... Mark 12:29
Deuteronomy 4:16
|
|
|
Rank: Elder Joined: 2/26/2012 Posts: 15,980
|
VituVingiSana wrote:murchr wrote:To add to the 2 points above
3. Hedging is a gamble, a strategy that has to be mastered, one can hedge to their advantage or disadvantage. Most "financial strategists" in Kenya are accountants(as many wazuan's) and lack dearly in strategy. I agree in part with @selah...but again, Segman is not a bad CEO, I believe he is under pressure. The strategy to go long on forex forwards was a bad idea in hindsight but when the KShs was depreciating DAILY vs the USD during the volatile 82-107 period it can throw off the smartest of folks. The appreciation to 84 was unexpected by many including many importers stuck with expensive dollars. Hedging uncovered is gambling/speculation. I thought hedging should protect a company from such uncertainties? "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
|
|
|
Rank: Elder Joined: 7/11/2010 Posts: 5,040
|
murchr wrote:VituVingiSana wrote:murchr wrote:To add to the 2 points above
3. Hedging is a gamble, a strategy that has to be mastered, one can hedge to their advantage or disadvantage. Most "financial strategists" in Kenya are accountants(as many wazuan's) and lack dearly in strategy. I agree in part with @selah...but again, Segman is not a bad CEO, I believe he is under pressure. The strategy to go long on forex forwards was a bad idea in hindsight but when the KShs was depreciating DAILY vs the USD during the volatile 82-107 period it can throw off the smartest of folks. The appreciation to 84 was unexpected by many including many importers stuck with expensive dollars. Hedging uncovered is gambling/speculation. I thought hedging should protect a company from such uncertainties? guess who wins most of the time:the hedging company, its a double edged sword, when it goes against you... massive loss. u can be sure a hedging company somewhere had a VERY good year,last year. The investor's chief problem - and even his worst enemy - is likely to be himself
|
|
|
Rank: Elder Joined: 2/26/2012 Posts: 15,980
|
Aguytrying wrote:murchr wrote:VituVingiSana wrote:murchr wrote:To add to the 2 points above
3. Hedging is a gamble, a strategy that has to be mastered, one can hedge to their advantage or disadvantage. Most "financial strategists" in Kenya are accountants(as many wazuan's) and lack dearly in strategy. I agree in part with @selah...but again, Segman is not a bad CEO, I believe he is under pressure. The strategy to go long on forex forwards was a bad idea in hindsight but when the KShs was depreciating DAILY vs the USD during the volatile 82-107 period it can throw off the smartest of folks. The appreciation to 84 was unexpected by many including many importers stuck with expensive dollars. Hedging uncovered is gambling/speculation. I thought hedging should protect a company from such uncertainties? guess who wins most of the time:the hedging company, its a double edged sword, when it goes against you... massive loss. u can be sure a hedging company somewhere had a VERY good year,last year. Just like the casino "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
|
|
|
Rank: Member Joined: 2/8/2007 Posts: 808
|
@Mweke, Were you at the AGM or are you referring to the statement sent out.
|
|
|
Rank: Chief Joined: 5/31/2011 Posts: 5,121
|
Kausha wrote:@Mweke, Were you at the AGM or are you referring to the statement sent out. You clearly havent read my posts above
|
|
|
Rank: Chief Joined: 5/31/2011 Posts: 5,121
|
VituVingiSana wrote:mwekez@ji wrote:@VVS, and others who attended the AGM or are in the know
(i) What are the non-recurring restructuring expenses that will be incurred this year? Is KK laying off? Not mass layoffs. Retirement buy-outs, attrition via retirement/resignations, non-renewal of contracts
(ii) How much is expected to be spent on the restructuring? Not defined (or significant) but most of it provided for via pension contributions over the years.
(iii) What was said regarding NOCK buying out KK? Internal doc of NOCK. On the card for years. No offer made.
(iv) What other striking matters were discussed at the AGM? 2013 is a turnaround year. Lower volumes at higher margins. Kenya is the worst performer.
Tx @VVS. Awaiting H1 results to tell the amount/impact of the restructuring costs
|
|
|
Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
|
@Kausha & @ VVs when a Company start selling non performing assets just after making humongous Losses from a deal that went sour due to Poor risk management ...I say thats poor management. The selling of the Non-performing assets shld be a continuous process not a strategy to shore up Dwindling profits after poor performance. I agree with you the company is capital intensive but inventory management is key to KK success how you manage the distribution and wastage is what counts in this business. KK needs to be ahead of ERC,they need to exploit these controls to their advantage.Playing victim will not help. The Hedging position exposed this company to loses which I think the finance guys could have foreseen using uncomplicated models. You might heap praise on segman but his brilliance here is a no show. '......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
|
|
|
Wazua
»
Investor
»
Stocks
»
kenolkobil returns to profit in Q1 2013
Forum Jump
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.
|