Eveready finally shuts down due to heavy assault from cheap batteries

Battery maker Eveready East Africa has closed down its dry cell plant in Nakuru after grappling with unrelenting competition from low-cost imports.

It is the end of an era for the plant that employed 99 people and a new beginning for the company, which relied on the battery business for up to 60 per cent of its revenues.

It will now import batteries from its affiliate in Egypt to sell locally.

READ : EVEREADY PROFIT DIPS 34PC

All the workers will be dismissed at a cost of Sh110 million.

The company has taken a beating from cheap imported counterfeits that saw the plant operate at about 25 per cent of its capacity.

WILL BE OUTSOURCED

The closure is part of a five-year strategic plan meant to see the firm change its business model from manufacturing to a more commercial-oriented outfit that will still ride on the Eveready brand.

“It is our strategy to position the business on a growth plan over the next five years through diversification and a change of our business model,” managing director Jackson Mutua said at a media briefing in Nairobi yesterday.

He said the company had so far diversified into car batteries, shavers, light bulbs and would soon be launching undisclosed household and personal care products, whose manufacture will be outsourced, but retailed under the Eveready name.

Mr Mutua said the plan to import batteries from Energizer Egypt would cut costs of running the Nakuru factory and boost the firm’s competitiveness in terms of pricing.

Its 20-acre plot will be used for a real estate development projected to be implemented by its subsidiary Flamingo (K) Limited.

Mr Mutua described Flamingo as “our special-purpose vehicle to spearhead our real estate development plan, but the houses shall be strictly for letting and not for sale,”

Eveready East Africa has seen a consistent decline in sales volumes of its D-sized dry cell batteries that have contributed the lion’s share of revenues in the last five years.

As a result, its profitability has declined over the same period owing to a significant shift towards electricity-powered gadgets as more Kenyans get connected to the national power grid.

Cut-throat competition from cheap imports, mostly from the East, and new entrants have also gnawed at Eveready’s returns with its annual revenues dropping from Sh2.3 billion in 2005 to Sh1.37 billion last year.

Eveready was incorporated in 1967. The company has since become synonymous with the manufacture of the dry cell battery commonly known as D-battery.

The company has historical linkages through trade share relationships with the United States firm, Eveready Inc, and Energizer Inc.

POOR RETURNS

It listed on the Nairobi Securities Exchange in 2006, and has never paid dividends to its shareholders since then due to consistent poor returns.

On Monday, Eveready East Africa Limited share price closed at Sh2.95, 18 per cent above the 52-week low of Sh2.50 set in November last year.