KenGen Cuts Dividend to Sh0.75 as Capital Spending Outpaces Profit Growth

Kenya Electricity Generating Company (KenGen) cut its dividend to Sh0.75 a share for the year ended June 2026, down from Sh0.90 a year earlier. Revenue still rose 6.44 percent to Sh59.7 billion, according to audited results the company released in Nairobi on September 4.

The board attributed the lower payout to a heavier capital investment programme, not to any strain on earnings. Indeed, profit after tax held largely steady at Sh10.4 billion, down just 1.22 percent from Sh10.5 billion in the 2025 financial year.

KenGen FY2026 Snapshot (KShs millions)

Metric	30-Jun-26	YoY Change	30-Jun-25
Total revenue	59,712	6.44%	56,098
Reimbursable expenses (fuel and water)	10,201	5.74%	9,647
Gross profit	49,511	6.59%	46,451
Other income	783	-7.99%	851
Net forex and fair valuation gains	1,417	-2.48%	1,453
Total operating expenses	37,537	6.83%	35,138
Operating profit	14,174	4.09%	13,617
Finance income	2,861	-30.39%	4,110
Finance costs	1,982	-12.07%	2,254
Profit before tax	15,053	-2.71%	15,473
Net profit (after tax)	10,353	-1.22%	10,481
Earnings per share (KShs)	1.57	-1.26%	1.59
Dividend per share (KShs)	0.75	-16.67%	0.90
Total assets	500,072	-1.09%	505,573
Total liabilities	209,925	-5.02%	221,029
Total equity	290,147	1.97%	284,544

Source: KenGen audited results for the year ended 30 June 2026.

Revenue growth was driven by higher electricity sales and improved dispatch across KenGen's generation portfolio. That dispatch reached 8,975 gigawatt-hours supplied to the national grid over the year, representing 57.2 percent of national electricity demand. Of that total, more than 90 percent came from renewable sources.

Operating profit rose 4.09 percent to Sh14.2 billion, but operating expenses grew faster, up 6.83 percent to Sh37.5 billion, on planned maintenance and reliability spending. Finance income fell 30.39 percent to Sh2.9 billion as KenGen redirected cash reserves into capital projects instead of short-term investments. That same capital push lifted purchases of property, plant and equipment, up 14.35 percent to Sh15.5 billion.

That capital spending is the direct counterweight to the dividend cut. Money that would otherwise support a larger payout is instead funding new generation capacity, at the same time as the company draws down debt. The dividend payout ratio fell to 47.77 percent of earnings from 56.60 percent, in step with that shift. Kenya Power, reporting to the same June year end, made the opposite call, raising its payout 50 percent to Sh1.50 while its cost base ran ahead of revenue.

On the balance sheet, borrowings fell 11.17 percent, or Sh12.2 billion, to Sh97.1 billion, cutting finance costs by 12.07 percent to Sh2.0 billion. That deleveraging came even as cash generated from operations rose 7.10 percent to Sh29.9 billion, and total comprehensive income increased 7.55 percent to Sh11.5 billion. Despite that stronger cash position, earnings per share slipped slightly to Sh1.57 from Sh1.59.

KenGen FY2026 Key Ratios

Ratio	30-Jun-26	30-Jun-25
Gross profit margin	82.92%	82.80%
Operating profit margin	23.74%	24.27%
Net profit margin	17.34%	18.68%
Cost-to-income ratio	75.82%	75.65%
Return on Assets (ROA)	2.07%	2.07%
Return on Equity (ROE)	3.57%	3.68%
Equity-to-Assets ratio	58.02%	56.28%
Debt-to-Equity ratio	72.35%	77.68%
Debt-to-Asset ratio	41.98%	43.72%
Dividend payout ratio	47.77%	56.60%

The ratios point to margin compression, not a weaker business. Net profit margin fell to 17.34 percent from 18.68 percent even as revenue grew, since costs and the drop in finance income ate into the gain faster than sales expanded.

Returns stayed thin for a capital-intensive utility. Return on equity slipped to 3.57 percent from 3.68 percent, and return on assets held flat at 2.07 percent. That is a reminder of how much balance sheet KenGen carries to generate each shilling of profit.

The one clear improvement was leverage. Debt-to-equity eased to 72.35 percent from 77.68 percent, consistent with a company using cash flow to pay down borrowings instead of expanding the balance sheet. Kenya Power ran the same play a year earlier, when accelerated loan repayments carried its own results.

The results land against a backdrop of rising domestic power demand. National peak demand climbed roughly 8.5 percent to 2,514 megawatts in June 2026, from 2,316 megawatts in February 2025. That tracks an economy that grew 5.3 percent in the first quarter of 2026, up from 4.9 percent a year earlier. Both listed generators and distributors are state-controlled, and tariffs, capital allocation and debt guarantees are set politically: our event study found Kenya Power repricing significantly around both the 2017 and 2022 general elections.

KenGen said it is advancing a diversified project pipeline under the Least Cost Power Development Plan, spanning geothermal, hydro, wind, solar, nuclear and battery storage. Near-term projects include the 63 MW Olkaria I rehabilitation, a 42.5 MW solar plant at Seven Forks, and a 58.42 MW wellhead geothermal leasing project.

The company is also positioning its KenGen Green Energy Park, now gazetted as a special economic zone, as a platform for green industrial investment. Beyond that, it is exporting its geothermal expertise to Tanzania, Bhutan and Eswatini.

Shareholders on the register as at October 29, 2026 will be entitled to the Sh0.75-a-share dividend and payment is due on or about January 21, 2027. A dividend declared in one financial year and paid in the next is why the payout in the accounts rarely matches the cash that reaches shareholders in the same period.

• To analyse KenGen's reported numbers over the last four years, click here, or follow the payout record on its dividend view and the borrowings behind this year's capital spending on its solvency view.

Bottom line for investors: this reads as a capital allocation choice, not a profit warning. Earnings held broadly steady and leverage improved. But the Sh0.75-a-share payout, down from Sh0.90, means income-focused holders take a near-term cut in yield while KenGen funds its generation pipeline and pays down debt. That trade-off, a smaller dividend now for a stronger balance sheet and more generation capacity later, is the one to weigh ahead of the AGM vote.

Source: KenGen audited financial results for the year ended 30 June 2026, released September 4, 2026.