Kenya Railways restructuring starts bearing fruit
Posted: 29 Sep 2012, 17:40
Railways makes Sh1.2bn profits as restructuring starts bearing fruit
By NATION REPORTER
Posted Friday, September 28 2012 at 18:40
Kenya Railways has roared into profitability after years of losses as its restructuring starts to bear fruit.
The corporation which manages the railway network in Kenya has benefited from the government’s decision to convert its Sh40 billion debt into equity thereby cutting down on interest expense.
Kenya Railways has posted Sh1.2 billion in profits after tax for the financial year ending June 2012 up from a Sh2.1 billion loss suffered over a similar period in 2011.
The company’s management attributes the change of fortune to a 35 per cent increase in revenues to Sh1.9 billion in the period under review.
“The turnaround of Kenya Railways began in earnest in 2007 when a new strategic plan was put in place after the concession of railway operations to Rift Valley Railways in 2006,†said KRC board chairman general (RTD) Jeremiah Kianga.
Adding that the firm has been restructuring its business, a move that has seen it reduce its operating expenses especially on wage costs.
In the year ending June 2011, the government converted Sh40 billion of loans that were taken by KRC in the 70’s and 80’s into equity capital — a strategy that has improved the firm’s asset base to Sh46 billion from negative Sh7.5 billion.
“We have a very lean workforce and an efficient technology system that has helped us achieve maximum revenues since we rebranded in 2010,†said KRC managing director Nduva Muli. Adding that the firm is concentrating on plans to open 22 new railway stations over the next few years in order to expand its operations.
By NATION REPORTER
Posted Friday, September 28 2012 at 18:40
Kenya Railways has roared into profitability after years of losses as its restructuring starts to bear fruit.
The corporation which manages the railway network in Kenya has benefited from the government’s decision to convert its Sh40 billion debt into equity thereby cutting down on interest expense.
Kenya Railways has posted Sh1.2 billion in profits after tax for the financial year ending June 2012 up from a Sh2.1 billion loss suffered over a similar period in 2011.
The company’s management attributes the change of fortune to a 35 per cent increase in revenues to Sh1.9 billion in the period under review.
“The turnaround of Kenya Railways began in earnest in 2007 when a new strategic plan was put in place after the concession of railway operations to Rift Valley Railways in 2006,†said KRC board chairman general (RTD) Jeremiah Kianga.
Adding that the firm has been restructuring its business, a move that has seen it reduce its operating expenses especially on wage costs.
In the year ending June 2011, the government converted Sh40 billion of loans that were taken by KRC in the 70’s and 80’s into equity capital — a strategy that has improved the firm’s asset base to Sh46 billion from negative Sh7.5 billion.
“We have a very lean workforce and an efficient technology system that has helped us achieve maximum revenues since we rebranded in 2010,†said KRC managing director Nduva Muli. Adding that the firm is concentrating on plans to open 22 new railway stations over the next few years in order to expand its operations.