Eveready East Africa sinks further into the red with Sh206.5m loss
By Patrick Alushula | February 1st 2017
Regional consumer goods company Eveready East Africa has sunk deeper into trouble after posting a Sh206.5 million loss for the full year ended September 30, 2016.
The loss is Sh5 million or 2.48 per cent higher compared to the Sh201.5 million loss it posted in 2015. It comes less than a year before the lapse of its 2013-17 strategic plan.
Managing Director Jackson Mutua said yesterday the company grappled with stock-out incidents, especially in the first half of the year, impacting negatively on both domestic and export businesses.
“The company experienced a challenging out-of-stock situation occasioned by lack of supplies from our global supplier of carbon zinc and alkaline batteries, which adversely affected supply for a considerable period during the year under review,” said Mr Mutua.
As a result, revenue more than halved (51 per cent reduction) to Sh553.3 million compared with Sh1.12 billion in the previous financial year.
This marked the sixth consecutive year of dwindling sales. In 2011, the firm posted Sh1.37 billion as revenue. Last year, the firm closed its operations in Uganda to focus on working partnerships through third parties. This saw it suffer Sh34.7 million loss from discontinued operations. However, loss from continued operations has reduced by Sh10.3 million to Sh171.8 million. During the year under review, Eveready spent Sh72.4 million in servicing loans compared with Sh50.3 million in 2015.
The company attributed the increase to a high interest rate regime. The period under review only covered one month of capped interest rates. The firm’s working capital, a difference between current assets and current liabilities, has worsened. Negative working capital has widened to Sh320.8 million, being more than three times the situation in 2015.
With just Sh3.7 million as cash at bank and in hand and reduced inventories, the group may struggle to service liabilities falling due in the next 12 months.
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In the year under review, the firm made key strategic decisions such as sale of its Nakuru property to clear debt and help support working capital for the business.
During the period under review, Eveready also lost a strategic partner in Energizer Middle East and Africa.
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