Car and General net profit hits Sh42m despite excise tax on motorcycles

Car & General doubled profits despite the Excise Duty Act (2015), which slapped a Sh10,000 levy on all motorbikes.

Auto dealer Car & General defied a 2015 ban on the licencing of new tuk tuks in Mombasa to more than double its net profit for the half year ended March. FILE PHOTO | JACOB OWITI  NATION MEDIA GROUP

In Summary

• Car & General doubled profits despite the Excise Duty Act (2015), which slapped a Sh10,000 levy on all motorbikes.
• Mombasa County Governor Hassan Joho in July 2015 also banned the licencing of new tuk tuks in Mombasa, saying the nearly 7,000 three-wheelers in the seaside metropolis were exacerbating traffic congestion.
• Car & General is the franchise holder for Piaggio tuk tuks, Suzuki and TVS motorcycles, as well as Kubota tractors in its auto division.

Auto dealer Car & General defied new excise tax on motorcycles and the Mombasa county government’s ban on three-wheelers popularly known as tuk tuks to more than double its net profit for the half year ended March.
The NSE-listed firm posted an after-tax profit of Sh41.8 million in the six-month period compared to Sh16.6 million in March 2015.
Car & General — whose product portfolio includes diesel generators, earth movers and light construction equipment, laundry equipment, lawnmowers, water pumps, lubricants, tyres, and tractors — saw topline remain flat to post Sh4.8 billion in sales from Sh4.7 billion in a similar period last year.
“Volumes in our consumer business — two wheelers and three wheelers — were curtailed by government regulations, namely, excise duty on two wheelers and a Mombasa county ban on three wheeler registrations between December and March,” Car & General said in a statement.
The Excise Duty Act (2015), which took effect on December 1, slapped a Sh10,000 levy on all motorbikes.
Mombasa County Governor Hassan Joho in July 2015 also banned the licencing of new tuk tuks in Mombasa, saying the nearly 7,000 three-wheelers in the seaside metropolis were exacerbating traffic congestion.
Car & General is the franchise holder for Piaggio tuk tuks, Suzuki and TVS motorcycles, as well as Kubota tractors in its auto division.
The firm said it is banking on new product lines such as agricultural tractors, Toyota forklifts, motorbike and tuk tuk tyres, and Doosan construction equipment to grow revenue and income.
Car & General suffered a Sh77.1 million foreign exchange loss, mainly linked to the massive devaluation of the South Sudanese pound.
The company exports to regional markets such as Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Eritrea, Djibouti, Seychelles, Somalia and South Sudan.
Car & General chief operating officer David Chesoni projects a tough trading period in the full-year to September, due to the current high-interest rate regime and cash flow constraints.
“The next six months are unpredictable given current risk aversion and constrained liquidity conditions,” said Mr Chesoni.
Car & General issued a profit alert last year and later reported a 54.3 per cent plunge in earnings at Sh127.1 million in the full-year ended September 2015.
Official data shows the number of motorbikes registered in Kenya grew by a fifth to hit 134,645 units as at December 2015 while tuk tuks surged by a tenth to 4,775 units – thanks to the continued exponential growth of Kenya’s fledgling boda boda industry