Sameer narrows loss 68pc after closure of tyre unit

Sameer Africa #ticker:FIRE narrowed its net loss 68 per cent to Sh58.5 million in the half year ended June, benefiting from the closure of its troubled tyre business.

The Nairobi Securities Exchange-listed firm had made a net loss of Sh182.7 million a year earlier.

It closed the loss-making tyre unit in May, leaving it with the real estate business, which it says is profitable.

“Following the group’s restructuring during the first half of 2020, and the discontinuation of loss-making operations, the performance during the second half of this year is forecast to improve as compared to the first half,” Sameer said in a statement.

The company had earlier estimated that it would make a net profit of Sh69 million in the full year ending December, adding that this will rise to Sh185 million in 2021.

Sameer’s sales in the half year period dropped 52.6 per cent to Sh440.9 million, reflecting the impact of the tyre business closure.

The company’s costs also dropped sharply, resulting in the smaller loss.

“Group overheads for the period reduced to Sh128 million as compared to Sh339 million during the first half of 2019, adapting to a lean operating structure,” Sameer said.

The company retrenched 73 workers who were employed in the tyre distribution business at a cost of Sh60 million.

Closing the tyre division also resulted in cost of goods sold falling 56.3 per cent to Sh314.5 million.

Sameer’s real estate business includes land holdings and stakes in Sameer Business Park (25 per cent) and Sameer Industrial Park (100 per cent) which leases space to tenants.

The company recently disclosed that its commercial property and land holdings jumped in value last year to post a paper gain of Sh7.7 billion which has not been reflected in its financial statements.

Businessman Naushad Merali, Sameer’s major shareholder, boosted his stake in the company to a new high of 74.06 per cent after two of his companies bought a total of 5.3 million shares of the NSE-listed firm in the year ended December 2019.