Eveready posts Sh90m pre-tax loss as low battery supply pulls down firm’s earnings

Battery manufacturer, Eveready East Africa has reported a Sh90.89 million loss before tax for the six months ended March 31, 2016, blaming the fall on low stock supplies.

Speaking in regard to the company’s earnings, Eveready Group Managing Director Jackson Mutua noted that the firm’s diversification programme has been yielding positive results but problems in stock supply weighed down the performance.

He stated that revenues from these products continue to record steady growth.

“The group however, recorded a drop in revenue in the half year results for the period ended March 31, 2016 compared to the same period last year as a result of changes within our main supplier of Carbo Zinc and Alkaline batteries, which adversely affected the supply of product for a considerable period of time,” Mutua added.

This aspect, he explained, led to an out of stock situation, a factor that “compromised revenue performance and contributed to a loss before tax of Sh90 million compared to a loss of Sh18 million in prior period.”

The out of stock situation has been addressed and recovery is expected going forward, Ms Lucy Waithaka, Board Chair and Mutua said in a joint statement.

“We continue to avail to our customers our traditional products under the portable power business. Diversification into new products remains important to our strategic efforts towards achieving sustainable growth in revenues. To ths end, Eveready will be introducing new product lines in 2016. This will broaden our portfolio mix, enhance revenues and mitigate supplier risk inherent in the business,” they added.

Last year, Eveready’s bid to diversify its business gained momentum after shareholders approved two key projects.

Meeting in Nakuru in May 2015 at the firm’s 48th Annual General Meeting (AGM), shareholders gave the nod to the management to sell idle equipment at the company’s closed factory.

They also gave them the green light to partner with Orbit Chemicals to create a joint 50-50 manufacturing venture.

“We want to see if we can set up a shopping mall or hospitality facility,” Mr Mutua said.

The joint manufacturing venture will give Eveready a presence in the household manufacturing segment, including production of detergents, which is considered a growth sector in Kenya.

The company plans to extend its product portfolio to the personal care, energy, real estate and automotive battery sectors.

 

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