Tyre stock outage plunges Sameer into half-year loss

A Sameer employee works at the firm's Nairobi plant
A Sameer employee works at the firm's Nairobi plant before it was closed. FILE PHOTO | NMG  

Sameer Africa #ticker:FIRE has recorded a net loss of Sh11.58 million in the six months to June 2018, down from a profit of Sh3.85 million a year earlier.

The publicly traded tyre distributor has blamed delays in finalising an overseas manufacturing deal for the performance.

The firm, which has interests in a number of sectors such as manufacturing, agriculture and transport, said sales fell 22.15 per cent to Sh1.26 billion from Sh1.49 billion the previous year.

The company said its flagship tyre business experienced a stock outage due to a holdup involving an offshore manufacturing deal with producers in low-cost China and India.

“The group has been transitioning to offshore contract manufacturing since 2017. The transition has taken longer than initially envisaged, leading to significant product shortages that have depressed sales in our markets,” the firm said in a statement to investors at the Nairobi Securities Exchange.

Sameer shut down its Yana tyre manufacturing factory in August 2016 citing a tough business environment largely due to an influx of cheap imports from China and India amid rising production costs.

The company has also struggled to recover from a one-off Sh877 million reorganisation cost, comprising Sh293 million for staff redundancy costs, Sh179 million in fixed assets impairment and Sh405 million it spent on impairment of raw material and factory spares.

In the six months ended June 2018, operating expenses fell a marginal 4.6 per cent to Sh352.76 million compared with Sh369.77 million in corresponding period last year.