Eveready seeks CMA approval to diversify from battery business

Eveready will in the next two months seek the nod of the Capital Markets Authority (CMA) to diversify into new product lines and cut reliance on the battery business that has been hit by falling sales.

The firm’s CEO Jackson Mutua said the company will use a new subsidiary to penetrate areas that do not form part of its core business.

Shareholders in 2012 approved the formation of the new subsidiary known as Flamingo Properties Ltd to speed up the diversification.

“The activities we will engage in are confidential at this point because we need to inform CMA first. In the next one to two months we will be writing to them,” said Jackson Mutua, managing director at Eveready East Africa.

“Focus will continue to be on improving productivity and efficiency within existing business as well us rolling out new product lines.”

Decline in sales

Its core business is the manufacture of dry cells, which account for nearly 90 per cent of its sales, and sale of flashlights and razors.

The battery firm has seen a consistent decline in sales volumes and profitability in the last five years, owing to a shift towards electricity-powered gadgets as more Kenyans get connected to the national power grid.

Cut-throat competition from cheap imports, mostly from China, and new entrants has also hurt the Nakuru-based firm.

Its annual revenues have dropped from Sh2.3 billion in 2005 to Sh1.4 billion last year and the firm has been struggling to pay a dividend since listing at the Nairobi bourse in 2006. It last paid a dividend of Sh0.45 in 2007.

Eveready’s share has gained 46 per cent over the past year to Sh2.85, which is below the IPO price of Sh9.50.