Sameer Africa #ticker:SMER has returned to tyre distribution after shutting down the division in May last year to tame a loss-making streak amid efforts to cut costs, including outsourcing production to Asia.
At the time, the Nairobi Securities Exchange-listed firm told its shareholders that it would focus on its real estate business, which it projected would return it to profitability.
But in a turnaround bid, the company says it sees both the property and tyre businesses paying off under its four-year (2021-2024) strategic plan.
“This change has been justified by the sustained demand for the 'Yana' brand and the success of the company's turnaround efforts in 2020,” said Sameer in a notice on Monday.
“The board is confident that the measures put in place by management will support improved performance by the company.”
Sameer had been the tyre business before calling it quits. The division accounted for about 90 per cent of the company’s revenue, selling both Yana and Summit brand of tyres.
Sameer also sold used motor vehicles and other assets that were used in the tyre business.
In 2016, the company closed its Nairobi factory to cut cuts and turned to India and China for production. However, it continued to suffer losses reporting net loss of Sh529.3 million in 2018 and Sh182.7 million in the half-year ended in June 2019.
After closing its troubled tyre business and sent 73 workers home, it narrowed its net loss 68 per cent to Sh58.5 million in the half-year ended June 2020.
The company had earlier estimated that it would make a net profit of Sh69 million in the full year ending December, adding that this would rise to Sh185 million in 2021.
Sameer’s property investments include land holdings and stakes in Sameer Business Park (25 per cent) and Sameer Industrial Park (100 per cent), which lease space to tenants.
On Monday, the board also confirmed acting managing director Peter Gitonga as its substantive head effective January 1, 2021.
Mr Gitonga, a board member, had been appointed as the acting MD in August 2019 to replace Simon Ngigi, who quit the company after a one-year stint.
Mr Gitonga has previously served in different capacities at senior management level in Sameer. He holds a Bachelor of Science degree in business administration and a Master of science in strategic management from the United States International University.