Umeme, DFCU say Covid-19 has affected profitability, may not issue dividends

Hakim Wampamba

Umeme and DFCU Bank have told shareholders this year that they may not be able to issue them dividends due to a reduction in profits.

In a statement, Umeme said the reduction is attributed to the effects of the Covid-19 pandemic, regulatory lag, and suspension of government’s free electricity connections policy.

Umeme cautioned shareholders and potential investors to exercise caution while trading the company shares in the secondary markets.

DFCU bank, too, said there will be a decline in profits as a result of the impact of Covid-19 pandemic on its customers and business operations that resulted into the increase in the provision of bad debts.

The bank said its earnings were also affected by the highly anticipated write off of some loans and advances that formed part of the financial assets acquired by the company in 2017 transaction (CRANE BANK, DFCU transaction).

Last year, both companies declared profits and relatively good dividends for the shareholders.

Umeme made profits of Shs 139 billion, roughly half of which was paid out as dividends to shareholders while DFCU made Shs 73.4 billion, Shs 40 billion of which was paid out as dividends.

Both companies said they are optimistic of a positive out turn on their operations and are committed to embarking on a robust business recovery.

Financial experts continue to warn of reductions in share values for listed companies and  reduction in the dividends owing to the negative impact of Covid-19 and other business cycle related effects.