Hurt by a dip in profits, battery manufacturer Eveready East Africa said yesterday it will carry on with production at its Nakuru plant despite anxiety over renewed violence in the area.

The company has already issued a profit warning due to the on-going violence.

In a statement issued by the company board last week, Eveready said it expected the violence that erupted in the country after the announcement of the disputed December 27 presidential poll and the ensuing political standoff to adversely affect its performance in 2008.

In what appeared to be a defiant attempt at ensuring continuity in production and distribution of dry cells, Managing Director Steven Smith said all the workers at the Nakuru plant will continue with work. Dry Cell batteries account for an estimated 90 per cent of Eveready's sales.

The company's dry cell manufacturing unit is located along the Nakuru-Kericho highway which has been barricaded by armed gangs protesting either at the outcome of the presidential election and the aftermath.

Heavily armed police and the military have fortified the major commercial highway and transport along the route has slowly been returning to normal.

More than 50 people have been killed in the normally peaceful Nakuru town following four days of violence that has spread to the nearby Naivasha town where gangs from rival communities have been fighting each other with machetes, clubs, and bows and arrows.

Smith said the battery company opened its doors for more than 300 workers this week. "The workers are secure. Authorities have informed the Kenya Association of Manufacturers that the police and the army have controlled the situation. Our workers will be safe" said Mr Smith.

"Together with several manufacturers in Nakuru, we decided to open our doors to our workers," said Mr Smith. In the profit warning, the company said its profits dipped 23 per cent last year.

Eveready's pre-tax profits reduced from Sh234 million recorded in 2006 to Sh179.5 million in the financial year ended September 30 2007, a drop the company attributed to an "unprecedented" increase in the cost of a key raw material, Zinc which accounted for an additional Sh200 million of its manufacturing costs bill.

The company, which went public in 2006, also attributes the slump in profitability to shareholder services costs that increased operating expenses by Sh30 million The company said it will continue with manufacturing and that the police had guaranteed security for the workers. Smith said he has adjusted the reporting time for the employees.

"We allow our workers to leave early and even report to work late because in some cases getting transportation is not easy. We have ensured that our workers are taken care of" said Smith.

Mr, Smith who is also the chairman of the Kenya Association of Manufacturers said several other companies including bakeries operating in Nakuru had opened business yesterday.

The battery maker has been battling an influx of cheap batteries mainly from China and the invention of alternative technology such as the use of rechargeable batteries as it battles to grow its revenues in recent years.

The 2007 Economic survey shows that output of dry cells dropped by 1.7 per cent in 2006, and attributes this to the failure of the local industry to compete with imports.