Sameer profit dips by 93 per cent

Tyre firm Sameer Africa has reported a 93 per cent drop in post-tax profit for the past six months, with high costs of financing and raw materials eating into the company’s revenues.

The half-year financial results published on Wednesday indicate the firm made Sh3.8 million in profit, down from Sh43.5 million made in a similar period last year.

The results come in the wake of the firm closing down its manufacturing plant on Mombasa Road in line with shareholders’ decision to outsource manufacturing, casting doubt on the future of more than 500 workers.

“Increases in the price of rubber and crude oil exerted pressure on production costs for tyre manufacturers worldwide and resulted in a gross margin decline for the group from 31 per cent reported in 2016 to 28 per cent for the current half year,” stated the firm in a statement accompanying the results.

Shareholders of the firm, which makes the popular Yana tyres, last year approved a plan to outsource manufacturing as one of the measures to shore up costs and compete effectively with cheap Asian imports.

Sameer last year announced it had incurred costs of up to Sh877 million to close the factory, impair its assets and compensate workers who lost their jobs.

The company also had to draw down its cash reserves as well as make short-term borrowing of Sh282 million to fund the closure.