Kenya's Sameer Africa issues profit warning - CNBC Africa

Kenya's Sameer Africa issues profit warning

East Africa

by Elayne Wangalwa 0

Sameer Africa Limited has announced a profit warning after recording a 64 per cent drop in its half year profit before tax. PHOTO: Praag

Sameer, a leading tyre manufacturer with offices in Kenya, reported a fall in profit after tax for the six months ending 30 June 2014 to 80.9 million Kenyan shillings from 303 million Kenyan shillings posted the previous period last year.

The Nairobi Securities Exchange-listed company said the main factor affecting this year’s financial performance was a 255 million Kenyan shillings profit on the sale of leasehold land recorded last year which will not recur in 2014.

“This profit warning announcement is based on the unaudited six months results and forecasts of the group and preliminary evaluation made by the board with reference to figures and information currently available,” the company said in a statement.

(WATCH VIDEO: Sameer Africa eyes Nigerian tyre space)

The firm’s revenue for the period was 1 per cent above last year's buoyed by increased sales to state bodies and other key corporate accounts which grew by 61 per cent.

Sameer, whose year to date share price is at 48.57 per cent, is currently negotiating with an Asian investor to buy 40 per cent of its manufacturing unit to fund a plan to boost productivity.

The company is looking to upgrade its factory in Nairobi, in order to increase production.

In 2013, the group more than doubled its after tax profit to 401 million Kenyan shillings for the year ended 31 December compared to 188 million Kenyan shillings in the previous year.

The tyre maker has operations and subsidiaries in other neighbouring African countries. 

Sameer joins most of the agricultural firms listed on the Nairobi bourse, among them Sasini and Kapchorua Tea, which have issued profit warnings on the back of the drop in international tea and coffee prices.