- Sameer Africa made a net profit of Sh43.4 million in the year ended December, breaking its two-year loss-making streak.
- The company had posted a net loss of Sh1 billion and Sh529.3 million in 2019 and 2018 respectively.
- Sameer did not declare a dividend for the review period, taking the payout drought to seven years.
Sameer Africa #ticker:SMER made a net profit of Sh43.4 million in the year ended December, breaking its two-year loss-making streak.
The company had posted a net loss of Sh1 billion and Sh529.3 million in 2019 and 2018 respectively. Sameer did not declare a dividend for the review period, taking the payout drought to seven years.
The firm last paid a dividend of Sh0.3 per share for the year ended December 2013.
The return to profitability was aided by a sharp reduction in costs following the closure of its troubled tyre distribution business in May last year when it announced it would focus exclusively on real estate development.
The Nairobi Securities Exchange-listed firm, however made an about-turn in February this year when it announced it was re-entering the tyre distribution market on renewed demand for its Yana brands.
“The group’s revenue reduced by 57 per cent from Sh1.76 billion in 2019 to Sh757 million in 2020 following closure and resumption of tyre business operations,” Sameer said in a statement.
“Despite 2020 being a difficult year, the group reported a profit … which was a significant turnaround and improvement from the loss of Sh1 billion reported for the year 2019.”
The closure of the tyre business for the most part of last year helped the firm to make deep cuts in its expenses, having laid off all the workers who were employed in that division.
Cost of sales, for instance, dropped by Sh973.3 million to Sh513.7 million while operating expenses declined by Sh758.1 million to Sh118 million.
The lower costs boosted margins significantly even as sales fell, causing the return to profitability.
Sameer said its priority this year will be the roll-out of a new strategic plan focusing on both the tyre and property businesses. It is not clear whether the firm will reopen the factory in Nairobi’s Industrial Area or it will resume off-shore production via contract manufacturers.
The temporary exit from the tyre business triggered a scrutiny of the company’s buildings and land holdings whose market value has not been reflected in its financial statements.
Sameer said the disclosure of the fair value of its investment property was a key audit matter but the comments on this issue by the external auditor, RSM Eastern Africa LLP, was not published.