The 81.8 percent profit slump Nico Holdings Limited has posted in the half-year ended June 30 2012 has forced the financial services group not to pay dividend to its shareholders.
Last year, the Malawi Stock Exchange (MSE)-listed group paid K699 million (about $2.2 million) in dividends, an equivalent of 75 tambala per share down from the previous yearâ€™s K1.64 per share, according to published financial results.
In the half year, the results show that Nico Holdings has achieved a K237 million (about $790 000) profit, down from last yearâ€™s K1.3 billion (about $4.3m), largely affected by exchange rate losses and increased policy holdersâ€™ benefits payment particularly in its insurance business.
Nico Holdings results are a clear indication that firms are still sailing in troubled waters despite the Joyce Banda administration undertaking a number of economic reforms to rescue the ailing economy characterised by runaway inflation, high interest rates and liquidity squeeze.
The results also give a clear picture of how the devaluation and the subsequent floatation of the local currency on May 7 and the liquidity squeeze have battered most of the listed financial services firms.
But looking into the future, the groupâ€™s chairperson George Jaffu and managing director Felix Mlusu are hopeful of registering progress in both business growth and profitability in the second half
â€œDespite the unfavourable economic conditions in the first half of year, which have resulted in significant decline in our profitability, we are encouraged by recent developments in Malawi, and coupled with the strategies that we are pursuing in the second half of the year, it is our expectation that the group will register significant progress in both business growth and profitability in the remaining half of the year,â€ says the statement accompanying the results.
But the company says tight liquidity situation that emerged in April will remain for the better part of the second half and margins could be squeezed as â€œmonetary authorities continue mopping up excess cash from the marketâ€.