Car & General posts 30pc decline in profit on higher tax charge
C&G has a wide range of business divisions ranging from real estate, poultry farming and distribution of automotive and engineering products. PHOTO | FILE
Car & General recorded a 30.1 per cent net profit drop in the year ended September attributed mainly to a higher tax bill than the previous year.
The company made a net profit of Sh88.8 million in the review period (when it had a tax charge of Sh61.4 million) compared to Sh127.1 million the year before when it benefited from a Sh46 million tax credit.
C&G’s sales fell 1.9 per cent to Sh9.7 billion, with the firm saying demand for its automotive products was particularly hurt by increased taxes, regulations and tighter credit markets.
“In Kenya, 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,” C&G said in a statement.
“Whereas our generator businesses continued to grow, growth in our other equipment businesses (construction, tractors and forklifts) has been limited by the prevailing high interest rate regime and the subsequent cap on interest rates.”
C&G has a wide range of business divisions ranging from real estate, poultry farming and distribution of automotive and engineering products.
The firm says new franchises such as Doosan building equipment, Kubota tractors, Toyota forklifts and MRF tyres are gaining traction and will provide more stable revenues in the coming years.
Its earnings are expected to take a hit this year after a 50 per cent dilution in its distribution of Cummins diesel engines and generators.
The maker of the products, Netherlands-based Cummins BV, will take a 50 per cent stake in a joint venture with C&G which has been selling them alone in the region since 2006.
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