Sameer Africa closed its tyre manufacturing plant in Kenya in August 2016. PHOTO | FILE | NATION MEDIA GROUP
Kenya tyre maker Sameer Africa doubled its losses last year,
with the management blaming its exit from the tyre production for the
poor performance.
The Nairobi Stock
Exchange-listed company is now operating on a negative working capital
of Ksh134 million ($1.34 million), and incurred a net loss of Ksh1.06
billion ($10.6 million) last year compared with a net loss of Ksh529.32
million ($5.29 million) in 2018.
Total
revenues declined 15 per cent to Ksh1.75 billion ($17.5 million) from
Ksh2.06 billion ($20.6 million) in the same period while total assets
fell to Ksh1.53 billion ($15.3 million) from Ksh2.58 billion ($25.8
million).
“The loss for the year
significantly increased following a decision to exit from the tyre
business leading to the impairment of the tyre business assets and
accrual of staff redundancy costs,” the company said in a statement. The
company has announced its exit from the tyre manufacturing business
citing difficult operating conditions for a turnaround, with total
revenues for this year forecast to fall by a further Ksh1.49 billion
($14.9 million).
The company closed
its tyre manufacturing plant in Kenya in August 2016, opting to contract
manufacturers in China and India. “Despite introducing new product
lines, increasing the retail footprint and reducing costs, the company
has not been successful in returning the business to the desired
profitability levels.”
The board
approved its exit from the tyre business in order to ring-fence the key
profit units, reduce costs and capitalise on the rental segment of the
business.
“Regrettably, this change will lead to the
closure of our tyre centres and the loss of jobs for some 73 staff. The
impact of this change is that the company will now trade mainly in the
rental business.” The company hopes that its profitability will increase
with projections for 2021 forecast at Ksh185 million ($1.85 million).
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