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