[2008-05-27]  Sameer issues profit warning
Tyremaker Sameer Africa Limited has warned that its profits for the financial year ending December 31, 2008 would fall significantly.


Tyremaker Sameer has issued a profit warning due to rising production costs. Photo/ANTHONY KAMAU
“This is to inform our shareholders and the general public that we anticipate a significant fall in our full year profits and trading levels,” Eric Kimani, the company’s managing director, said.

He attributed the expected shortfall in both the company’s sales and earnings to the post-election violence that rocked the country early this year and the rising prices of fuel and raw materials.

Mr Kimani said the violence coupled with the escalating oil prices and the synthetic-based tyre building inputs in the world market have increased the company’s production costs by 20 per cent since the beginning of the year.

“Our projection is that this trend will continue to affect our volumes, value and profits for the year,” he said. The company was formerly known as Firestone East Africa (1969) Limited.

Below expectations

Although the company’s results will be positive, its earnings are expected to be below the annual forecast.

“Consequently, our results will be significantly below current market expectations for the year ending December 31, 2008,” said Mr Kimani. The company becomes the second Nairobi Stock Exchange (NSE) listed company associated with businessman Naushad Merali to issue a profit warning after Eveready East Africa Limited.

The battery manufacturer warned in March this year that its profits for the financial year ending September 30, 2008 would fall drastically, citing the post-election unrest.

But the two firms have not been having it easy as a result of cheap imports, especially from Asia, that have eaten into their hitherto near monopolistic markets.

Sameer Africa made a Sh166.5 million pre-tax profit in 2007, up from a Sh14.9 million loss in the previous year. Its turnover grew by 9.4 per cent to stand at Sh3.469 billion in 2007.

However, the firm’s management says it remains committed to a 5-year strategic plan aimed at transforming the company into the leading tyre solutions provider in East Africa and beyond.

The plan, aimed at improving its profitability, entails cost cutting, measures, promotion of the export business and expansion of its retail outlets.



Source: Nation Media Group 2007