Troubled tyre maker Sameer Africa Plc has shed 107 jobs and put up an undisclosed property for sale to ease its biting cashflow constraints and return to profitability.
The regional tyre distributor revealed through its 2020 annual report that it declared 107 positions redundant comprising management staff (75) and unionisable employees (32), translating to over Ksh245 million ($2.28 million) in staff cost savings during the year (2020).
The loss-making firm, which is listed on the Nairobi Securities Exchange (NSE) with operations in Uganda, Tanzania and Burundi, also plans to close several retail outlets this year and adopt a new business model for its wholesale customers where it will only sell to customers who have a history of prompt payment, cash sales and who are able to pay in advance.
According to the report, the firm also intends to focus on its rental business with a view to achieving a target of 100 percent occupancy including a "proposed sale of a property to facilitate stabilisation of the liquidity position of the company."
"Following the change in the group business strategy, the Group plans to close several retail outlets," the firm said. "The board plans to return the company back to profitability through various strategies."
Sameer, which is 72.48 percent owned by Sameer Investments Ltd, closed its tyre manufacturing plant in Kenya in August 2016 and started contract manufacturing in China and India. However things did not work out well and in April last year the firm announced its total exit from the tyre manufacturing business citing difficult operating conditions for its turnaround.
Barely a year later in February this year the firm made a surprising move to reverse its decision to exit the tyre manufacturing business, arguing that the change of tune was prompted by the sustained demand for the ‘Yana’ Tyre brand and the intense turnaround plan launched last year. The firm said it will now be involved in contract manufacturing, import and distribution of tyres, with a new focus on property development and management
Last year, the firm’s total revenues declined by 57 percent to Ksh757 million ($7.07 million) from Ksh1.75 billion ($16.35 million) in 2019 largely due to the unavailability of key stocking units as a result of the planned closure of tyre business. The bulk (78.15 percent) of the group’s revenues accrue from the Kenyan operations with regional operations contributing a paltry 3.49 percent to the group’s top-line. These include Burundi (0.39 percent), […]
