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Kenya: Eveready Half-Year Profits Dip 91 Percent
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The Nation (Nairobi)
15 May 2008
Posted to the web 15 May 2008
Mwaniki Wahome
Nairobi
Eveready East Africa Limited has registered a massive reduction in its pre-tax profits for the first six months upto March 31st.
According to unaudited financial reports signed by company secretary. The company's profits dropped by 91 per cent to Sh11 million compared to Sh116 million realised in the same period last year.
The board attributed the sharp decline to entry of zero-rated duty batteries into the local market and disruption of business in the first two months of this year following chaos that broke out over disputed presidential results.
"The shortfall is a repercussion of unfair competition from large quantities of zero-rated duty imports of very low priced batteries into the Kenyan market which began in 2007," the financial report said.
Strong shilling
The depreciation of the shilling in that period is also cited as having further sliced the company's revenue. Overall, the company's revenue in the period under review reduced by 18 per cent. Eveready has been grappling with increased competition from low-priced batteries, particularly from China. Last month, it laid off 36 permanent staff at a cost of Sh35 million, and is re-organising its production systems in cost-cutting the company says will affect the results of the second half of the year.
The board said the benefits will be manifest in 18 months. The company has scaled down its investment in a new production line in Nakuru to Sh40 million from the planned Sh100 million.
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It has also diversified its product range, picking up health care products it intends to introduce later this year, while also targeting new markets in Sudan and Somalia. The board did not recommend any interim dividend.
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