Eveready profit dips 35pc
Battery manufacturing in process at the Eveready East Africa Ltd plant in Nakuru. PHOTO | FILE | NMG
What you need to know:
- Battery maker made Sh45 million profit after tax
- The company said that the dumping of cheap and substandard batteries in the Kenyan market also had a negative effect on its earnings.
- The firm listed on the Nairobi Securities Exchange in 2006 at Sh9.5 per share.
Battery maker Eveready’s profit after tax for the full year ending September 30 decreased by 35 per cent due to a huge drop in revenue from exports, it says in a statement.
The company said that the dumping of cheap and substandard batteries in the Kenyan market also had a negative effect on its earnings.
The battery maker made Sh45 million profit after tax in the year under review, compared to Sh70 million realised in a similar period in 2012.
The decline is attributed to challenges in the export market and a forex exchange loss.
“The export business was impacted by distribution challenges in Tanzania,” the company’s management said in a statement following the release of the annual results Tuesday.
EXPORT BUSINESS DECLINES
Revenues from the export business declined by 35 per cent, further hampering growth.
The company also incurred a foreign exchange loss of Sh13 million compared to the gain of Sh51 million recorded in the last financial year.
Turnover rose marginally by 3.6 per cent to Sh1.42 billion from Sh1.37 billion registered in 2012.
“While the challenge of dumping of substandard products continued to persist unabated, the Board believes that the business is now firmly on a path to growth,” the statement from the management further noted.
The firm is now riding on its product diversification strategy that includes investment in property and beauty products distribution to weather the challenges as the influx of cheap Chinese batteries and a hurting export market take a toll on operations.
Shareholder wealth has also been drastically eroded by a sharp reduction in the company’s share price to Sh2.7 per stock as trading came to an end on December 23.
The firm listed on the Nairobi Securities Exchange in 2006 at Sh9.5 per share.
UGANDAN SUBSIDIARY
The company has also opened a wholly-owned subsidiary in Uganda to support distribution efforts in the region.
“We do believe initiatives being implemented over the next two years will put the business firmly on a sustainable growth trajectory,” the management said.
