Sameer sales decline, writes off Shs984.2m investments

Drop in sales. Sameer, the distributors of Yana Tyres have been facing increased competition thus a fall in sales and turnover. FILE PHOTO

Tyre distributor Sameer Africa has written off Sh14.9b of its investment in regional subsidiaries, indicating it expects to lose the capital.
According to the company’s annual report for the year ended December 31, 2018, Sameer decreased the value of its investment by Shs984.2m in Uganda, Shs5.73b in Tanzania and Shs8.2b in Burundi.
The subsidiaries, the report said, just like the Kenyan parent company, have lost market share and have been making losses for years.
Sales in Uganda fell to Shs4.4b in the period under review compared to Sh7.8b the year before.
In Tanzania, the company’s income shrunk to Shs8.5b from Shs14.5b while sales in Burundi declined to Shs2.4b from Shs3.5b.
The devaluation saw Sameer’s investment in subsidiaries drop to Shs4.8b in the year ended December compared to Shs19.7b a year earlier.
The capital impairment, marked as an expense, also contributed to Sameer’s loss in the review exacerbated by a sharp reduction in shareholder funds.
The Nairobi Securities Exchange-listed firm reported a net loss of Shs19.5b in the review period, reversing a net profit of Shs481m recorded the year before.
Total equity or shareholder funds dropped to Shs40.7b from Shs66.6b.
Sameer, which closed its tyre manufacturing plant and switched to imports from Asia, currently has a market capitalisation of Shs31.3b million on the NSE.
Sameer said cut-throat competition continues to raid its regional subsidiaries.
“At the same time, the regional business in Tanzania, Uganda and Burundi has been adversely affected by counterfeit products that easily out-price our brands in these markets,” Mr Erastus Mwongera, the Sameer chairman, wrote to shareholders in the report, noting that this had necessitated a significant write down of the investments the company held in those markets.
Sameer has faced increased competition from established and new tyre brands besides counterfeits.
The company opted to appoint contract manufacturers in Asia to produce its brands as it sought to counter the cheaper prices of imported tyres.

Increased competition

Sameer has faced increased competition from established and new tyre brands besides counterfeits.
The company opted to appoint contract manufacturers in Asia to produce its brands as it sought to counter the cheaper prices of imported tyres.