Sanlam Kenya Plc has joined a growing list of firms issuing profit warnings on high cost of doing business, amid a gloomy economy.

The firm’s unaudited financial results projects a decline in the company’s earnings after tax for the fiscal year ending December 31, 2023.

A statement by the firm’s board suggest a decrease of at least 25 per cent, compared to the earnings reported for the preceding year.

“The board of directors of the company are of the view that the company’s projected earnings after tax for the year ending 31st December 2023 are at least 25 per cent lower than the earnings after tax reported for the year ended 31st December 2022,” read the statement in part.

Unrealistic fair value

The downturn in projected earnings is attributed to several factors, with high interest rates being a primary driver. The prevailing economic conditions have led to increased finance costs, creating a challenging financial environment for Sanlam Kenya Plc.

Additionally, unrealised fair value losses on the company’s portfolio of government securities have further contributed to the anticipated decline.

“Shareholders of Sanlam Kenya plc and the public are therefore advised to exercise caution when dealing with the shares of the company,” the board said statement.

The statement, issued in accordance with regulatory requirements, sheds light on the company’s outlook and the proactive measures being taken, even as the firm joins Express Kenya and Kakuzi which are among listed firms to recently issue profit warnings, an indication of a tough business environment that most businesses find themselves in.

Others that have issued warnings since March this year include Sameer Africa, Crown paints, WWP ScanGroup, Longhorn Publishers, Sasini, Car & General, Nation Media group, Centum Investment Company, Unga Group and kenya Power.

According to experts, the trend could heighten caution among investors as the stock market continues to decline.

Additionally, analysts have noted that investors are increasingly factoring in a potential economic downturn in Kenya next year.

Crucial financial insights

These announcements serve as a testament to the company’s dedication to openness and accountability, providing stakeholders with crucial insights into the current financial landscape and the strategic measures being employed to address the challenges at hand.

As the firm navigates these headwinds, the commitment to innovation and efficiency signals a forward-looking approach, emphasizing the company’s determination to weather the storm and emerge stronger in the future.

Last year, the firm also offered a profit warning, attributing it to increasing premium default and claims from COVID -19 fatalities.

Recent profit warnings from listed companies may signalfurther challenges for corporate Kenya. Already, the Central Bank of Kenya (CBK) has responded to inflation concerns by implementing a significant increase in interest rates.