The beat goes on for Kuwait investment companies as the sector leader announced another steep profit decline yesterday and raised eyebrows by not setting aside provisions. Kuwait Projects Company (KIPCO), the country's biggest investment company by assets, posted a 61 per cent decline in its second-quarter net profit. The company made a point of saying it had enough cash to meet its obligations until 2020. "Our results are also underpinned by KIPCO's strong financials where we have enough cash to meet all our debt obligations until 2020," said Samer Khanachet, the chief operating officer at KIPCO. Net profit for the quarter came in at 4.83 million dinars, down from 12.4m dinars in the same period last year, KIPCO said in a statement on the Kuwaiti bourse website.
"This is the delayed effect of the global crisis starting to show on them," said Naser al Nafisi, the general manager of Al Joman Centre for Economic Consultancy. He said several of their listed and unlisted companies were showing signs of trouble. Mr al Nafisi said that in his opinion KIPCO should be booking provisions. The company said its total assets in the first half fell 0.75 per cent to 5.3 billion dinars and shareholder's equity also fell 1 per cent to 548m dinars.
KIPCO launched a US$500m bond issue last month with a 10-year tenor and a yield of 9.5 per cent. Mr Khanachet said the issue, which was oversubscribed by almost four times, was "a clear indication that we enjoy strong investor support for our business strategy". He said it was "perhaps a little too early to foresee signs of market recovery but we remain optimistic that the outlook will improve in the foreseeable future".
KIPCO's shares closed flat at 0.360 dinar yesterday. They are down more than 30 per cent in the past five months. The results were announced after the market closed. * with Reuters
