Inside Politics

Winners, losers in the coronavirus economy

Wednesday, October 21st, 2020 00:00 |
Beating Coronavirus-19 pandemic globally. Photo/File

While most companies are struggling financially this year and a number may not survive due to severe lockdowns, some are prospering.

The list of the fortunate few has telecommunication, e-commerce, health, logistics, retail and home entertainment providers.

Stay at home friendly companies such as Internet service providers like Safaricom, Wananchi, Jamii Telcom among others saw their subscriber numbers swell as companies resorted to working from home.

The list of data providers which also includes Internet Solutions, Airtel and Telkom also gained from increased demand.

Stoked by a 25 per cent surge in fixed broadband connections and mobile money transactions, Safaricom stock is trading at Sh30 a share currently from as low as Sh24 in the beginning of the year.

In the health category, manufacturers and distributors of sanitisers and soaps such as Reckit Benckiser who make Dettol had difficulties keeping up with demand.

Tropikal Brands which supplies sanitisers and handwashers was among the winners.

Pharmacies and telemedicine firms like MyDawa also grew their orders due to high demand for drug supplements, gloves and non-contact thermometres, reporting high demand for drugs like Controversial drug hydroxychloroquine. 

“Companies that helped people adjust to staying at home like supermarkets, logistics and home entertainment were rewarded,” said the CEO of Rich Management AlyKhan Satchu.

Logistic services

Logistic services companies like Glovo, Sendy, Uber Eats and many other cargo suppliers rode on the pandemic to expand their customer base and cement their brands.

E-commerce firms like Jumia, Kilimall and emerging online platforms grew their orders as more Kenyans went online for especially daily purchases like groceries and other fast moving consumer goods.

“The volume of orders increased beginning March as people were forced to stay at home, demand for deliveries of basics like groceries went up,” said Jumia CEO Sam Chappatte.

However, on the flipside the list of losers is longer. The companies on the losing end are travel industry including airlines, manufacturing, insurance, hospitality, events and many more.

Travel companies have been brought to a complete halt with airlines running into losses and staring at bankruptcies.

Cash-Strapped Kenya Airways, for instant was hit by another shocker after the National Treasury rejected its Sh7 billion bailout request it made following the grounding of passenger planes due to the Covid-19 pandemic.

The airline also said that it was on the verge of collapse if the bailout request did not go through.

“After this pandemic, all airlines need support not just KQ, the support should be in a structured manner,” said the senior consultant at Aviation Information Consultants Githae Mwaniki.

Energy distributor Kenya Power said their earnings for the year will be at least 25 percent less than the Sh262 million it made last year due to Covid-19 restrictions and lockdowns.

“Based on a review of the company’s financial performance the board of directors has determined that the earnings for the financial year ended June 30, 2020 are projected to be lower than the earnings for the previous year,” said Kenya Power in a profit warning.

In the hospitality sector, listed TPS Serena  that entails Serena Hotel brand and lodges across East Africa has seen its stock swing from Sh24 a share early in the year to Sh14 currently wiping off 40 percent of its shareholder wealth.

Media companies and advertising agencies were some of the most affected as advertisers peeled Sh25 billion off their advertising budgets due to uncertainty. 

Fund managers

Insurance companies and fund managers which pile their funds in the stock market like Britam booked losses too as investors dumped stocks for the money.

Britam announced Sh1.6 billion half year loss despite 8 per cent jump in revenue due to the Nairobi Securities Exchange meltdown.

Oil majors like Tullow suffered as price of oil dropped below the cost of production further hurting its already negative cash flow.

Tullow sent home nearly a third of its employees pushing more Kenyans into unemployment.

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