Sameer Africa Plc has trimmed its workforce in management and administration by more than half, as the company scaled down its operations in the tyre distribution business just three years after making a U-turn on a decision to completely exit the business.
The Nairobi Securities Exchange-listed company disclosed through its latest annual report (2023) that it is implementing a three-year plan that will see it shift its operations from the traditional business line of sourcing and trading in tyres to industrial real estate.
“The board will continue to support management in execution of the three-year strategic plan that pivots the business from its traditional business line of sourcing and trading in tyres to industrial real estate,” the company says attributing the decline in revenues during the financial year ended December 31 to the scaling down of tyre business.
The company’s net profit for the year ended December 31, 2023 declined by 53.78 percent to Sh46.33 million ($350.984.84) from Sh100.26 million ($759,545.45) in 2022 while total revenues declined by 36 percent to Ksh390.49 million ($2.95 million) from Ksh613.06 million ($4.64 million).
“The reduced performance was mainly attributable to the scaling down of our tyre business in line with our strategic shift to industrial real estate,” the company says.
The group further disclosed that the number of employees in the management and administration category declined to 15 in 2023 from 33 in 2022, indicating that 18 employees accounting for 54.54 percent of the employees in this category exited the company in the 12 months to December 31, 2023.
In In 2020 the company declared 107 positions redundant comprising management staff (75) and unionisable employees (32), saying it intended to focus on its rental business with a view to achieving a target of 100 percent occupancy.
Sameer, which is 72.48 percent owned by Sameer Investments Ltd, closed its tyre manufacturing plant in Kenya in August 2016 and started contract manufacturing in China and India.
However, things did not work out well and in April 2020 the firm announced its total exit from the tyre manufacturing business citing difficult operating conditions for its turnaround.
And barely a year later in February 2021 the company made a surprising move to reverse its decision to exit the tyre manufacturing business, arguing that the change of tune was prompted by the sustained demand for the ‘Yana’ Tyre brand and the intense turnaround plan launched in 2020.
The company said it will now be involved in contract manufacturing, import and distribution of tyres, with a new focus on property development and management.
Sameer Africa is involved in the sourcing, importation, and sale of tyres, tubes, and flaps and letting of investment properties. But the company now says it is shifting focus to industrial real estate business.
Sameer has faced rising production costs and increased competition from cheap imports in the tyre market that have subdued its sales. Yana brand of tyres were introduced in the market in the year 2005 replacing Firestone Tyres which were being manufactured under a contract from Bridgestone Corporation the holders of the brand name.
The switch to a new name was the final phase of a rebranding process by Sameer Africa which until 2005 was trading as Firestone East Africa (1969).
In January 2021, the Sameer Africa board approved a four-year (2021-2024) strategic plan anchored on both the Company’s real estate portfolio and its extensive tyre industry experience as part of efforts to revert to the profitability path.
Sameer, which has regional operations in Uganda, Burundi and Tanzania issued a profit warning that its net earnings for the year 2023 will be lower than 25 percent of the earnings reported in 2022 because of the continued depreciation of the Kenya shilling against major currencies.
The company says it is implementing initiatives aimed at retiring the foreign currency denominated liabilities by June 2024.
