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).
According to the report, the firm also intends to focus on its rental business to achieve a target of 100 per cent 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 board plans to return the company back to profitability through various strategies.” Sameer Africa in its annual report
The loss-making firm has operations in Uganda, Tanzania, and Burundi. It also plans to close several retail outlets this year and adopt a new business model for its wholesale customers. It will only sell to customers with a history of prompt payment and cash sales and who can pay in advance.
Sameer Africa, which is 72.48 per cent 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.
Sameer Africa Financial Results
Sameer Africa Plc reported a Kes 43 million net profit during the financial year ended 30th December 2020, a remarkable improvement from the Kes 1.1 billion net loss posted during the same period December 2019.
The tyre manufacturer recorded a decline in revenue by 57% to Kes 757 million during the financial ended 30th December 2020 from Kes1.76 billion recorded in 2019. The decline was attributed to the group’s brief closure of its tyre business due to failure by several strategies undertaken to improve the business and the competition faced by other tyre companies.
“The Board will continue to both challenge and support the actions of management as they work to ensure the Group transitions successfully over the next coming years to a more profitable and cash generating business in the future,” Sameer Africa in its report.