A Sameer Africa employee puts final touches on a tyre at the Nairobi plant. File
By VICTOR JUMA
Tyre manufacturer Sameer Africa
has issued a profit warning for the year ending December, predicting
that its net earnings will decline by more than a quarter from last
year. The dip in comparable earnings is mainly attributable to the
company’s one-off gain last year of Sh255.3 million that was booked from
the sale of land.
Sameer posted a net profit of Sh401.1 million in 2013, with
the earnings alert and a weaker performance in the first six months
signalling that the firm will make a net profit of less than Sh300
million by year-end.
“The group’s projected earnings for the year ending
December 2014 are… expected to be more than 25 per cent lower than the
reported earnings for the previous year,” the firm said in a statement.
“The main factor expected to affect financial
performance in 2014 compared to last year is a Sh255 million profit on
sale of leasehold land recorded in 2013, which is not expected to recur
in 2014.”
Its share price has gained 51 per cent in the past
one year to trade at Sh7.8 per unit. Last year the firm sold a two-acre
land along Mombasa Road for Sh297.5 million, netting a profit of Sh255.3
million. This helped boost its performance in the period whose
operating profit before tax remained unchanged at Sh1 billion.
The company’s net profit in the half year ended
June dropped 73.2 per cent to Sh80.9 million compared to Sh303 million
in the same period last year when the impact of the land sale had been
booked.
Political instability
Sameer’s sales in the period rose one per cent to
Sh1.96 billion, with the firm saying its export sales to South Sudan and
Malawi fell by 40 per cent due to political instability and currency
shortages respectively. Its cost of goods sold (COGS) dropped 5.2 per
cent to Sh1.3 billion, benefiting from cheaper prices of raw materials
in the international markets.
Sameer is set to introduce cheaper Summit tyre
brands this month to rev up sales in a competitive market, with the
NSE-listed firm also seeking to sell half of its tyre business for Sh1
billion to a strategic partner who will provide technical expertise.
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