When a company determines whether its profits will rise or fall short of analysis or its own previous targets it is updated as soon as possible. When a company falls short this is known as a profit warning.
Investors do want to avoid profit warning as key to gain successful long-term returns. The amount of future profits in a company is revised through professional analysts’ forecasts. 2019 marked another year where businesses in the Kenyan market struggled financially as witnessed in the number of profit warnings. Investors should expect proceeds to decline appreciably by at least 25% when compared with that of the foregoing year.
Real estate companies expected decline in the form of slow growth in the real real estate industry. Attributing its impact of reducing profits to moderate procurement strength thus low demand. The weakening performance on reduced sales in the real estate sector is pointed out by constrained credit access and decreasing spending power among investors or buyers. Also, a decline on growth of private sector credit is affecting real estate which mostly relies on bank loan access for unit purchases.
There are indicators that the weakening performance in the real estate market in Kenya and the uncertain end of the coronavirus pandemic will likely lead to further changes in the value of certain investment properties.
Despite incurring losses the property developers recorded an increase in revenues and as well annual growth in gross sales.
Real estate companies have introduced a new strategy to beat the odds by reinvesting revenues into the properties to meet the investors targets. Therefore remaining confident to continue operating efficiently to improve profitability and long term value.
The profit warning means that firms have not been able to meet projections as it had last year.