Tyre distributor Sameer Africa plans to lease out its defunct Nairobi factory within the next six months as part of a wider plan to diversify earnings.
Sameer closed its factory last year at a cost of Sh877 million citing a difficult business environment mainly caused by influx of cheap Chinese and Indian tyres, rising production costs and an unfavourable tax regime.
READ: Sameer shuts down Nairobi tyre plant in favour of imports
The company is now looking for a tenant to lease the facility on Mombasa Road, expecting that the rent earned from the venture will boost its business whose profit for the six months to June dropped 91 per cent to Sh3.84 million.
“The strategic changes recently implemented by the group to improve and diversify earnings … will take another six months to complete,” the firm said on Wednesday when releasing its half-year results.
“(They include) transiting to offshore manufacture of tyres, increasing the group’s retail footprint by opening additional tyre centres and tenanting the new available factory space at our Mombasa Road premises.”
The firm, listed on the Nairobi Securities Exchange, used to produce the Yana brand of tyres. It is now importing tyres from India and China through contract manufacturing.
Sameer’s revenues during the six months to June remained flat at Sh1.49 billion, which management attributes to depressed liquidity across all markets but more so to a “wait-and-see” attitude in Kenya in the run-up to the August 8 General Election.