Eveready EA posts Sh7.7 million half-year loss

Eveready East Africa Limited in Nakuru in a photo taken on 18-11-2014 PHOTO:BONIFACE THUKU/STANDARD]

Eveready East Africa Limited posted a loss for the six months to March, blaming its strategic move to its exit from some export markets, insecurity and a weaker shilling.

The Sh17.7 million loss compares to a pretax profit of Sh44.8 million recorded in a similar period the previous year. The company said its sales dropped by 18 per cent to Sh602.8 million and revenue declined as it had exited some markets that were unviable in the long-term.

Eveready said financing costs had increased, as extra funds were needed for the closure of a battery manufacturing plant in the Rift Valley town of Nakuru.

Financing costs had also increased due to a weaker shilling, which has lost about eight per cent against the dollar this year, the company said in a statement, adding that insecurity also presented access challenges to some of its local markets.

“Financing costs also increased due to additional cash demands at the close of the last financial year in order to finance the Nakuru plant closure coupled with the depreciation of the shilling witnessed over the last few months,” said Lucy Waithaka, board chairperson, Eveready East Africa Limited, in a statement.

STRATEGIC INITIATIVES

The firm is optimistic that diversification plans currently under implementation, together with opportunities available in some of the existing product lines, will provide growth momentum and focus the business on a path to profitability going forward. The business continues to deliver on its key strategic initiatives, which include implementing its aggressive portfolio diversification strategy aimed at expanding its revenue sources.

“Since the closure of the manufacturing plant last year and at the end of second quarter of the current financial year, the business introduced two product lines to its portfolio.

These product lines are expected to be introduced before the end of the current financial year,” said Waithaka. The firm says market reception of the new products is encouraging and it is looking forward to embedding the new products by year end.