Sameer now issues profit warning, blames shilling – Business Daily
Sameer Business Park in Nairobi. FILE PHOTO | NMG
Sameer Africa has issued a profit warning anticipating a more than 25 percent decline in full-year profits for the year ending December 2022.
The company blamed global supply shortages that have disrupted the tyre business and a sharp decline of the shilling that has increased the cost of imports.
Last year, Sameer’s net profit jumped five times to Sh217.3 million from Sh43.3 million in 2020 on cost containment. However, the company has run into headwinds on global disruptions, shilling decline and dollar shortages that have hurt importers.
“Global disruption in supply chain as a result of Covid-19 pandemic and the Eastern Europe conflict continues to impact availability of key products in our tyre business,” the company said.
“The weakening of the Kenyan shilling impacts margins adversely as the full effect of price changes cannot be passed to consumers.”
Sameer had this year set its priority on implementing the second phase of its new strategic plan, focusing on both the tyre and property businesses.
The firm earlier announced the closure of its troubled tyre distribution business when it had said it would focus exclusively on real estate development.
But the Nairobi Securities Exchange-listed firm later made an about-turn in February last year when it announced it was re-entering the tyre distribution market on renewed demand for its Yana brands.
Sameer Africa, which fully owns Sameer Industrial Park and Sameer Export Processing Zone had previously announced it would primarily focus on property development before reviving the tyre distribution business.
The firm also has a stake in Sameer Business Park — a complex of commercial offices along Mombasa Road, Nairobi.
Sameer also owns an estimated 85 acres of freehold land in Nairobi’s Embakasi that it bought decades ago.
The gains on the land parcel, running into billions of shillings, have not been reflected in the income statement.
The land had appreciated to Sh8.07 billion in the year ended December 2021, dwarfing the market value of the Nairobi Securities Exchange-listed firm.
The impact of the appreciating land holdings has not been reflected in the balance sheet or income statement since Sameer uses the original cost of acquiring the asset of Sh575.4 million.