24 March 2008

East Africa: Battery Maker Eveready in Bleak Financial Forecast

Nairobi — Eveready East Africa, a regional battery manufacturing giant has raised fears of a sudden plunge in its profits as a result of the two month political turmoil that engulfed the country.

The company, a member of the Sameer Group has expressed concerns to its shareholders of a looming recession in full year profits and trading levels that will have a major impact on its long term business strategy.

The company has therefore rolled out a number of mitigating measures including a larger portfolio of products like rechargeable batteries to the market to increase the capital investment for the medium and long term in facilities and processes.

In a public notice, the company's managing director Steven Smith said that though the financial outcome of the company's operation was expected to be profitable, there will be a significant fall below the current market expectation for the year ending 30th September 2008.

"We inform our shareholders and the general public that we anticipate to experience a material fall in our full year profits and trading levels," said Smith.

He said that the expected shortfall in both sales and earnings was attributed to the recent upshots of the post election violence which adversely hampered the delivery and distribution network of products and sales in the company's key market segments of Nyanza, Rift valley, Western Provinces and the regional market.

"We expect to continue to operate under challenging conditions in these and other markets in Nairobi and Mombasa where our selling plans have been disorganized due to disruptions of access and losses experience by the trading community in these areas," said Smith.

Consequent to the looming recession, Smith revealed that the company will continue to focus on cost control and efficiency improvement, with emphasis to the export market and to increasing the product range, in order to ensure growth and proper returns to our shareholders.

"Raw material prices are likely to remain volatile and we expect to continue to feel the pressure of the low priced batteries in the market. We will however continue to streamline operations and enhance manufacturing to preserve margins," said Smith.

This latest concern raised by the company could send some jitters on potential investors and the current shareholders who in fear of the looming recession could opt to liquidate their current shares in the company to invest in the forthcoming Safaricom Initial Public offer.

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