Car & General incurred Sh188 million costs on delayed clearance of its stock from the port last year, up from Sh1 million spent a year before, as it moved to comply with State’s order of using SGR to move containers.
The high clearance cost saw the firm’s net profit fall by 19 per cent to Sh182 million in the review period despite revenue jumping from Sh10.1 billion to Sh11.9 billion.
Forced use of costly Standard Gauge Railway (SGR) saw Car & General (Kenya)’s #ticker:C&G net profit drop by a fifth in the year to September on increased goods clearance costs.
The firm incurred Sh188 million costs on delayed clearance of its stock from the port last year, up from Sh1 million spent a year before, as it moved to comply with State’s order of using SGR to move containers.
The high clearance cost saw the firm’s net profit fall by 19 per cent to Sh182 million in the review period despite revenue jumping from Sh10.1 billion to Sh11.9 billion.
“Profitability was significantly impacted by storage and demurrage charges. This logistics change represented the biggest challenge this year. Our results would have been significantly better without this,” said chairman Nicholas Ng’ang’a.
Car & General’s sales in Kenya grew six per cent while sales outside Kenya grew 42 per cent supported by two and three-wheeler businesses.
Equipment businesses — tractors, construction equipment and forklifts — remained flat during the review period.
Kenya Ports Authority and Kenya Revenue Authority had ordered that all imported cargo to the Nairobi Inland Container Depot be transported aboard the SGR cargo train effective August 7 last year.
The government, later on, made a U-turn on the directive that looked set to boost SGR cargo revenues but hurt road truckers and operators of container freight stations in Mombasa that operate like clearance ports.
Mr Ng’ang’a said the U-turn has helped ease transportation. The firm deals in importation and sale of marine engines, motorcycles and three-wheeler vehicles, commercial laundry equipment, commercial engines, material handling equipment, earthmovers and general goods.
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