Markets & Finance

Eveready EA says it has resolved stockout issues despite analysts forecast

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Eveready EA board chair Lucy Waguthi Waithaka. Analysts say resumption of Eveready battery supplies may be too late to affect this year’s performance. PHOTO | SALATON NJAU

Eveready East Africa will have difficulties turning around its fortunes as it struggles to resume supplies of its battery products, say Sterling Capital analysts.

The analysts said resumption of Eveready battery supplies may be too late to affect this year’s performance given that it is yet to fully resumed distribution.

“They are trying to re-establish supplies but the restoration will not be in time to affect the half two 2016 numbers hence revenues may still be slightly suppressed during this period,” they said.

Eveready however said they had already received stock in their warehouses which they are distributing.

“We are already in positive stock situation and our portable power brands (Energizer and Eveready) and in all their selling units (all sizes) and in all categories (dry cell batteries and torches), are already with our channel partners across the county and with our consumers as we speak,” Margaret Odhiambo, Head of Corporate Services, said in an email.

Eveready remains in the red this year with the net loss for the six months to March worsening by nearly four times which the management has blamed on the stock outs.

READ: Eveready blames Sh58.9m loss on stock outs

The supply of Energizer batteries in the Kenyan market was affected by the break up of Energizer Holdings Inc into battery and personal care businesses in 2015.

Energizer split into new Energizer and Edgewell Personal Care which led to disruption in supplies.

Sterling Capital Limited said the effect was highlighted in the first half of the year as revenues were lower by almost 50 per cent at Sh300 million.

The battery firm reported a Sh58.9 million net loss in its first half-year earnings, compared to the Sh12.4 million loss posted during a similar period last year.

The D-size battery cell used to contribute 90 per cent of the company’s revenue but has now been scaled back to only 50 per cent.

The locally manufactured cell batteries targeted low-end consumers who do not have electricity. However, with the influx of cheap counterfeit batteries the company opted to import products from Egypt.