National carrier Kenya Airways expects a 25 per cent drop in profits for the financial year ending 31 December 2019.
In a statement, the board says that despite improved revenue growth in the year, the airline witnessed intensified competition in its area of operations. In return, the firm had pressures on its pricing model to remain competitive leading to the constrained profits.
Furthermore, Kenya Airways blames the new IFRS 16 rules adopted in 2019 for the anticipated drop in profits. The new rules require significant adjustments to the profit and loss statements and balance sheet for the current financial year.
Therefore, the forecasted financial results for the group will be lower than the earnings reported for the same period in 2018.
The troubled airline’s net loss for the first half of 2019 increased to KSh8.5 billion, up from KSh4 billion recorded in the first six months of 2018.
The airline joins a long list of listed firms that have issued a profit warning. Some of the companies include;
- CIC Issues Profit Warning, Cites High Claims in Insurance Business
- NSE Issues Profit Warning
- Media firm Standard Group Issues Profit Warning
- BOC Kenya Issues Profit Warning Citing Distressed Economy
- Eaagads Issues Profit Warning as Coffee Production Drops
- UAP Old Mutual Issues Profit Warning