Eveready East Africa posts Sh78 million loss

Consumer goods firm, Eveready East Africa, has posted Sh78 million loss for the financial year ended September 30, 2015. The Nairobi Securities Exchange listed firm said the volatile shilling, surging interest rates and challenging export markets cut its prospects of returning to profitability.

The loss, however, is 56 per cent improvement from Sh178 million loss recorded in a similar period in 2014. The loss means it is another dry year for shareholders as directors failed to recommend any dividend.

The company, which shut down its Nakuru dry cell making factory in 2014, also recorded a drop in revenue from Sh1.2 billion to Sh1.1 billion. The group attributed the 7 per cent drop in revenue to challenging business environment witnessed last year.

For the period ended September 30, 2015, the shilling shed 17 per cent of its value to the US dollar. This coupled with doubling interest rates, saw the company’s cost of servicing loans increase by 84 per cent.

In 2015, finance costs stood at Sh104 million compared to Sh56 million in a similar period in 2014. “Last year was very challenging for business and the Group was no exception. A strategic decision to review some of the challenging export markets resulted in a decline in revenue by 7 per cent,” the company said in a statement yesterday.

Despite these losses, the company is bullish that the next financial year will see them grow and return to profitability. In October last year, the firm embarked on a diversification drive that saw it unveil three supply and distribution partnerships.

Following the closure of its struggling factory that was running at only 25 per cent of its capacity, it turned to Chloride Egypt as its key supplier of automobile batteries. It also struck a deal with Pakistan’s Sayyed Engineers Limited to supply a range of writing instruments such as pens and rubbers.

Another strategic partnership was with Supreme Imports for supply of a range of lighting products under Eveready brand name.

This year, the company plans to invest in two additional product lines as the market for dry cells continues to narrow.