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Sameer Africa makes a u-turn on tyre business

By Wainaina Wambu | February 9th 2021
Yana Tyre Centre in Nairobi.

Sameer Africa has returned to the tyre manufacturing business, barely a year after a dramatic exit from the loss-making venture.

The company will now be involved in contract manufacturing, import and distribution of tyres.

The listed firm owned by billionaire businessman Naushad Merali had also shifted focus to its property portfolio development and management.

Importation and sale of tyres - it’s the core business that accounts for about 90 per cent of earnings was hit hard amidst the firm’s inability to compete with cheap tyre imports, mostly from China.

In a public announcement on Monday, the firm said reversing the decision was a result of “sustained demand” for the “Yana” tyre brand and intense turnaround efforts launched in 2020.

“The board’s decision to return to the tyre business reverses the earlier communicated decision made on April 20, 2020, to exit from the tyre business,” said the firm.

“This change has been justified by the sustained demand for the Yana brand and the success of the company’s turnaround efforts in 2020.”

The decision followed a meeting on January 22 where the board gave nod to a four-year strategic plan that lays out the firm’s renewed growth.

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 “Under the plan, the real estate business will invest in industrial property development in both greenfield projects and value addition to existing properties. While the tyre businesses will be aligned to the changing customer needs, the evolving tyre distribution ecosystem and costs re-alignment.”

“Both businesses are expected to be profitable,” said the announcement signed by Company Secretary Sheba Mohammed.

The board also confirmed the appointment of Peter Gitonga as the managing director of the company. Mr Gitonga has served in various managerial positions, most recently as the acting managing director of the company.

Sameer has been trading on the Nairobi Securities Exchange since 1995. The business is estimated to have incurred losses amounting to over Sh1 billion in the last two years. Mr Merali entered the tyre business in the late 1980s after he acquired Firestone, which was incorporated in Kenya in 1969.

Jobs lost

Last year saw the closure of a key brand that marked the end of an era for a company that was Kenya’s only tyre manufacturer, which once employed over 30,000 people both directly and indirectly.

About 125 workers had lost their livelihoods since the firm announced downsizing measures late last year.

Most of the jobs lost were as a result of the closure of the tyre centres that span the East African region. In a candid admission last year, Sameer Africa’s acting Managing Director, Peter Gitonga had said the firm was unable to turn around the tyre business after years of shifting strategy. Among its other tyre brands include Summit and Firestone.

The firm’s woes began in 2016 when it shut its local manufacturing plant. It then started contract manufacturing in China and India.

Also among its strategy was increasing its retail footprint through the opening of more tyre stores, but this did not work out.

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