Eveready braces for higher losses this year

Ac­cord­ing to pub­lished ac­counts for 2015, the firm’s fi­nance costs shot up to Sh104.1 mil­lion from Sh56.5 mil­lion in 2014

The Star (Kenya) - - News Business Financial Market - RICHARD MUNGAI @Richiy­mungai

Eveready has is­sued a profit warn­ing and called an ex­tra­or­di­nary share­hold­ers meet­ing to seek ap­proval for the sale of its 18.5 acres land in Nakuru to prop up rev­enues.

The bat­tery maker, which closed down its man­u­fac­tur­ing plant two years ago, said it ex­pects a full-year loss for the year ended Septem­ber 30.

Man­ag­ing direc­tor Jack­son Mu­tua said the com­pany has been op­er­at­ing on bor­rowed cash, and the sale of the prop­erty will un­lock funds for in­vest- ment in more pro­duc­tive ven­tures.

“The com­pany’s lev­els of bor­row­ing are un­sus­tain­able and the per­sis­tent high in­ter­est rate regime con­tin­ues to hurt our busi­ness and erode share­holder value,” he said yes­ter­day in a no­tice to in­vestors.

In the no­tice, the firm has con­vened an ex­tra­or­di­nary gen­eral meet­ing on Oc­to­ber 6, where it will seek the green light from share­hold­ers to sell the prop­erty and change its name to Eveready East Africa PLC.

Eveready had op­er­ated a bat­tery man­u­fac­tur­ing plant in Nakuru for 47 years, be­fore an­nounc­ing on Septem­ber 2014 that the plant would shut down due to loss of mar­ket share and un­healthy com­pe­ti­tion by coun­ter­feits and cheap im­ports. The Nakuru prop­erty has been idle since the fac­tory’s clo­sure. The shut­down re­sulted in the loss of 100 jobs. The com­pany now dis­trib­utes bat­ter­ies from En­er­gizer Egypt.

“In­vest­ing in a dis­tri­bu­tion cen­tre in Nairobi com­ple­ments our re­tail model and elim­i­nates our prop­erty leas­ing costs,” Mu­tua said.

The 2015 pub­lished ac­counts in­di­cate the firm’s fi­nance costs shot up to Sh104.1 mil­lion from Sh56.5 mil­lion in 2014, due to heavy bor­row­ing, in­clud­ing a for­eign-de­nom­i­nated cur­rency loan. This con­trib­uted to the Sh77.7 mil­lion loss it recorded last year.

/ ENOS TECHE

Eveready East Africa MD Jack­son Mu­tua in Nairobi dur­ing the un­veil­ing of 2014-17 strate­gic plan in 2014

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