Sameer Africa exit from Kenya costs it Sh877 Million
Tyre firm Sameer Africa has announced that the closure of the firm in Kenya cost it Sh877 Million.
The NSE-listed firm spent Sh293 million on staff redundancy costs, Sh179 million on fixed assets and Sh405 million on impairment of raw material.
“Tight liquidity restricted sales in all our markets and saw sales through our dealer channel fall 31 per cent,” Sameer said in a statement.
The company announced that it would be exiting the Kenyan market in September 2016.
The company said the decision was necessitated by competition from cheap and subsidised tyre imports entering its markets and would, therefore, commence offshore production by manufacturers in China and India.
“As a result, the company will incur a one-off charge in respect of plant and inventory impairment and employee severance costs estimated at approximately Sh725 million.
“The earnings for the current financial year are therefore expected to be lower by more than 25 percent of the earnings reported for the same period in 2015,” MD Allan Walmsley said while making the announcement.
Sammer’s profits had dwindled due to counterfeit tyres in the Kenya compelling them to make the decision.
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